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Technical note
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Reference no. UVA-C-2314
Authors: Mark E Haskins
Published by: Darden Business Publishing
Originally published in: 2010
Version: 3 August 2010
Length: 17 pages
Data source: Published sources

Abstract

This note explores discounted cash flows as a core technique for valuing a business, allocating scarce resources, and comparing alternative investments. Suitable for MBA and undergraduate business students, this note builds on students'' basic understanding of discounting future cash flows with simple examples to which students can easily relate. Whether the discounted cash flow process used to derive a net present value or an internal rate of return metric, it is powerful, rational, and informative.

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Abstract

This note explores discounted cash flows as a core technique for valuing a business, allocating scarce resources, and comparing alternative investments. Suitable for MBA and undergraduate business students, this note builds on students'' basic understanding of discounting future cash flows with simple examples to which students can easily relate. Whether the discounted cash flow process used to derive a net present value or an internal rate of return metric, it is powerful, rational, and informative.

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