Discount rate and monte carlo valuation
I have a question related to discount rate and monte carlo simulation in the curriculum in level II, volume III (corporate finance).
When estimating the value of a company using the WACC and DCF, it is assumed that the cash flow is the expected value of the cash flow in each year.
If we instead of using expected value in the DCF use monte carlo simulation to simulate a large number of possible outcomes for the cash flow in every year, every outcome is obviously not the expected value. What discount rate should then be used to calculate the enterprise value for each simulation, and how is this discount rate calculated? |
发表于 2011-7-11 19:02
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