Estimate the intrinsic value of a company by discounting its projected future free cash flows to their present value.
Estimated Enterprise Value:
$0
Estimated Equity Value:
Intrinsic Value Per Share:
DCF valuation sums the present value of all future cash flows, including a terminal value representing all years beyond the projection period.
Formula: Enterprise Value = Σ [FCF_n / (1+r)^n] + [Terminal Value / (1+r)^n]
Enterprise Value = Σ [FCF_n / (1+r)^n] + [Terminal Value / (1+r)^n]
Example: A company with $1M Initial FCF, 10% Growth Rate, and a 8% Discount Rate.
The Weighted Average Cost of Capital represents the average rate a company pays to finance its assets, used as the discount rate.
It is the constant rate at which a company is expected to grow forever, usually capped at the long-term GDP growth rate.
It focuses on cash generation rather than accounting profits, providing a fundamental 'check' against market prices.
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