What should you do if you don’t believe management’s projections for a DCF model?

You can take a few different approaches:

• You can create your own projections.

• You can modify management’s projections downward to make them more conservative.

• You can show a sensitivity table based on different growth rates and margins and show the values assuming management’s projections and assuming a more conservative set of numbers.

In reality, you’d probably do all of these if you had unrealistic projections.