OTHER METHODS OF CAPITAL NEEDS ANALYSIS
01.Core Concepts
• Uneven Cash Flow method can be used in lieu of traditional 4 step approach • Capital Preservation Model: Same capital at death • Purchasing Power Preservation Method: Same purchasing power at death • Serial Payment Approach: Savings increase each year • Other: Fixed amount at death (i.e., $1 million) • Capitalization of Earnings Approach: Most conservative of the four common methods (annuity, CP, PPP, cap. of earnings) • Similar to the model to value a preferred stock