Beruflich Dokumente
Kultur Dokumente
GROUP 5
NPV/DCF/IRR
PROS CONS
Doesn't take unique risk into account Not accurate Not suitable for high risk- longer duration scenario
Data easily available Suitable for heavy tangible investments Helpful when future is risky Helpful when earning period is brief and volatile
Allows multiple decisions Allows uncertainties over time Easy to understand and Implement Helpful when earning period is brief and volatile
Decision trees can be complex Need to adjust discount rates for each period Choice of chance probabilities subjective
REAL OPTIONS
PROS CONS
Uses probabilities of success of trials into account Takes Unique risk into account Useful for high risklonger duration scenarios
MULTIPLES
Incorporates both R&D growth and Earnings growth Useful when comparisons exist Relatively easy to understand
Identification of comparable is difficult May not cover all the risks Simplistic
QUESTIONS?