CapX = depreciation is unrealistic assumption for most terminal values; Frequent error causes overvaluation

Business Valuation UpdateVol. 8 No. 3
March 2002
Gilbert E. Matthews, MBA, CFA
discounted cash flow (DCF), subsequent events

Summary

This article calls attention to a very common error made by valuation analysts. In a growing company, capital expenditures logically should exceed depreciation in most instances. Yet, many analysts as ...