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Cash Flow Modelling - Assumptions?

JammyJammy Member
in Technical stuff

Hi everyone,

Would anyone be kind enough to share how your firm decides which assumptions to use (inflation rate / interest rates etc)

In the past we have typically used Voyant's default assumptions and then created a number of 'What-If's'.

Many thanks
J

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Comments

  • Gustavo_FringGustavo_Fring Member

    Hi Jammy,

    The important thing is that your assumptions are evidence backed. With this in mind, we tend to source data on CPI, AWE, Mortality etc and base our assumptions on that. For example, our assumption on CPI is the 30-year average. If questioned on it, we can point clients to this data and comment that cashflow tends to be a very long-term projection and our assumptions are based on data reflecting this fact, rather than recent, shorter-term macro trends.

    If there is a desire from the client to deviate away from the core assumptions, 'What Ifs' can cater for this.

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