CAPITAL-BUDGETING5 MIN READ
DCF Checklist: Cash, Rate, Time, Terminal
Recall the four DCF audit checks that protect a project NPV.
DCF audit word CART What does CART remind you to check in a project DCF? Cash, rate, timing, terminal Rate check Company WACC or project hurdle? The discount rate should follow the risk of the cash flows. Terminal value challenge Most of the NPV comes from terminal value. Is that okay? A long-life asset has a large salvage or continuing value assumption. Your line It can be okay, but we should show the terminal-value share of PV and a sensitivity because it is carrying the decision. Do not simply say terminal values are normal; quantify dependence. It makes the model's…
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