Discounted cash flow (DCF) method is the mostly used
fundamental method in business valuation, consequently
the basic problem that this study is faced with is; how
can improvements to the discounted cash flow model, as
it is used to value firms, be achieved?
The DCF model depends on two inputs; the numerator,
which is an estimated future cash flow and the
denominator i.e. discount rate (weighted average cost of
capital). The output of the model is dependent on these
two inputs. How to calculate the denominator are the
major concern of some scientific reports as well as the
topic of large discussions in financial text. To
summarise the problem discussion; the thesis is
conducted in order to find reasons behind problem areas
in the DCF approach to firm valuation, as well as how
improvements can be made to these areas. pdf 2007
