What are three key inputs to the valuation model? How would you determine the valuation of an asset? How would the intrinsic value differ from the market value? Explain your answer.
Valuation is the process of finding the value of any financial assets. The three key inputs to a valuation model are - (i) the expected cash flows from the asset over the life of the asset, (ii) the timing of the cash flows and the (iii) the required return which is based on the risk level of the cash flows.
The value of any assets is the present value of the cash flows. We estimate what the cash flows would be over the life of the asset, we then estimate at what rate these cash flows should be discounted so as ...
The solution explains the three key inputs to the valuation model in 385 words.