First Chicago method: Difference between revisions

Revision as of 12:11, 26 March 2014

Revision as of 05:19, 12 May 2014

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==Method==

The First Chicago Method takes account of payouts to the holder of specific investments in a company through the holding period under various scenarios; see [[Corporate_finance#Quantifying_uncertainty| Quantifying uncertainty]] under [[Corporate finance]]. Most often this methodology will involve the construction of:

* An "upside case" or "best -case scenario" (often, the [[business plan]] submitted)

* A "base case"

* A "downside" or "worst -case scenario."

Once these have been constructed, the [[valuation (finance)|valuation]] proceeds as follows.<ref>See, for example, Schumann (2006).</ref>