A New Method of DCF Valuation

6 Pages Posted: 26 Sep 2006

See all articles by Marek Capinski

Marek Capinski

AGH University of Science and Technology

Date Written: September 25, 2006

Abstract

We present a method of computing a value of a company where cash flows are discounted using cost of capital variable in time. In a multi-stage approach the cost of capital depends on the current financial structure and future cash flows by means of a recursive backward scheme. The valuation resembles the replication method used in option pricing.

Keywords: cost of capital, discounted cash flow, valuation

JEL Classification: G12, G30, G32

Suggested Citation

Capinski, Marek, A New Method of DCF Valuation (September 25, 2006). Available at SSRN: https://ssrn.com/abstract=932524 or http://dx.doi.org/10.2139/ssrn.932524

Marek Capinski (Contact Author)

AGH University of Science and Technology

Mickiewicza 30
Kraków, 30-059
Poland

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