El Departamento de Economía de la Universidad de Chile tiene el agrado de invitar a usted a un nuevo Seminario Académico:

Título - Discounted Cash Flow (DCF) Analysis: What’s Wrong With It And How To Fix It

Autores - Arturo Cifuentes (CREM-Universidad de Chile), Francisco Hawas, (Dii Universidad de Chile)

Presenta - Arturo Cifuentes (CREM-Universidad de Chile)

Abstract - What’s the value of an asset?  That is, arguably, the ultimate financial question.  The equivalent of Hamlet’s To-Be-Or-Not-To-Be: something everybody must deal with —from inexperienced undergraduates taking their first steps into the financial arena to seasoned investment managers.  We all know (or, at least, we think we know) the right answer: the present value of the future cash flows.  That much is clear.  If we push any expert for additional clarification, the response is always the same.  Something along the lines of:  “…take the future cash flows and discount them with the appropriate rate.”  Unfortunately, behind this seemingly innocuous statement there are two ill-defined concepts: “future cash flows” and “appropriate rate.” 

In this presentation we discuss those two concepts in detail, we comment briefly on a few objections to the conventional discounted cash flow (DCF) method, and we articulate what we think are the two most powerful (and new) arguments against its use: the fact that the standard version of the DCF approach is based on: (1) an inappropriate analogy with bond valuation; and (2) a negation of the stochastic nature of cash flows.  Finally, we make the case for recognizing the probabilistic nature of future cash flows and treat them, accordingly, with conventional statistical techniques.  Consequently, we propose a new approach to valuation which is based on this premise (cash flows are stochastic in nature) and we demonstrate the merits of this technique with an example based on a large-scale infrastructure project.

El  Seminario  se realizará el miércoles 02 julio de 13:00 a 14.00 hrs, en  la Sala P-309 Tercer Piso del edificio Placa de la Facultad de Economía y Negocios de la Universidad de Chile, ubicada en Diagonal Paraguay 257.