Present value models

Valuation models that estimate the intrinsic value of a security as the present value of the future benefits expected to be received from the security.

The dividend discount model define such benefits as the expected future dividends to be distributed to shareholders.  

For companies that pay little or no dividend, the FCFE model can be used. FCFE reflects the firm’s capacity to pay dividends.

Also Known As:
Discounted cash flow models
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