RADR Method Valuation Model
Originally published: 28/09/2016 18:15
Last version published: 28/09/2016 20:59
Publication number: ELQ-80373-3
View all versions & Certificate

RADR Method Valuation Model

Valuation by the RADR Method based on Discrete Scenario Cash Flow Forecast

The risk adjusted discount rate method (RADR) is similar to the NPV. It is defined as the present value of the expected or mean value of future cash flow distributions discounted at a discount rate, k, which includes a risk premium for the riskiness of the cashflows from the project (centerforpbbefr.rutgers.edu)

This model enables you to compute, over 5 years:
- The Estimated Cash Flow For the Project
- The Estimated Cost of Capital
- The Present Value of Expected Cash Flows and the Sum of PVs

- Cash Flows (Success Scenario, Expected Scenario, Failure Scenario) - Amount year 0 to 5 + Probability
- Risk free rate
- Market rate
- Comparable firm beta (year 1 to 5)

Note: for the CEQ (Certain Equivalent) Method go here: https://www.eloquens.com/method/M0Vibp/radr-method-valuation-model

From "Entrepreneurial Finance", by Janet Kilholm Smith, Richard L. Smith and Richard T. Bliss

Purchase the book here: https://www.amazon.fr/dp/0804770913

This Best Practice includes
1 Excel Model

Kevin Hanley offers you this Best Practice for free!

download for free

Add to bookmarks


4.6 / 5 (12 votes)

please wait...