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The fact that the company achieved its forecast may reduce its financial risk in the eyes of investors, thus increasing implied value; however this effect is unlikely to increase implied value by 19%. In addition, discounted cash flow analyses rely on multiple years of forecasts in assessing value. In fact, more than 50% of the implied value under the discounted cashflow analysis can be achieved in the terminal year calculation—which was the case here. Finally, if the company’s prospects had changed dramatically, value would increase, but not necessarily in direct correlation to the 19% discount rate.
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