Discounted Cash Flow (DCF) Valuation Model

Full firm valuation via explicit forecast period plus terminal value

DCF Model Parameters

DCF Logic: Project free cash flows for 5 years, estimate terminal value (perpetuity), discount all at WACC. Enterprise value = PV(explicit FCF) + PV(terminal value). Subtract net debt for equity value.

Base Year Revenue ($M)

Revenue Growth Rate (%)

Operating Margin (EBIT/Revenue) (%)

Tax Rate (%)

CapEx (% of Revenue)

Depreciation (% of Revenue)

Working Capital Change (% of revenue growth)

WACC (Discount Rate) (%)

Terminal Growth Rate (perpetuity) (%)

Net Debt ($M)

NOPAT = EBIT x (1 - Tax Rate)
FCF = NOPAT + Depreciation - CapEx - Delta_WorkingCapital

Terminal Value = FCF(year 5) x (1 + g) / (WACC - g)

Enterprise Value = SUM[PV(FCF yr 1-5)] + PV(Terminal Value)
Equity Value = Enterprise Value - Net Debt

Explicit Forecast Period (5 years)

Year	Revenue ($M)	EBIT ($M)	NOPAT ($M)	CapEx ($M)	Depreciation ($M)	Delta WC ($M)	Free Cash Flow ($M)	Discount Factor	PV of FCF ($M)

Valuation Summary

PV Explicit Forecast

$0M

Terminal Value

$0M

PV of Terminal Value

$0M

Enterprise Value

$0M

Less: Net Debt

$0M

Equity Value

$0M

Key Insight: Usually 60-80% of DCF value comes from terminal value. This makes DCF sensitive to terminal assumptions (growth rate, WACC). Always stress-test these.

Value Composition -- Explicit Forecast vs Terminal

Free Cash Flow Projection Chart

Valuation Football Field -- Sensitivity Analysis

Shows valuation range under different WACC and terminal growth assumptions