Traditional v/s DCF Methods


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TRADITIONAL V/S DCF METHODS

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Traditional method

 

  • The traditional method are also referred to as unsophisticated or non discounted cash flow method
  • These method is known as non DCF because they do not take time factor into consideration
  • These are the various Non DCF methods –
  1. Pay back period
  2. Accounting rate of return

 

 

DCF method

 

  • The discounted cash flow method are also known as sophisticated or time adjusted methods
  • This are known as DCF method because it take time factor into account
  • The following are the various DCF methods –
  1. Net present value
  2. Internal rate of return
  3. Profitability index

 

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