A Value, Not a Recommendation - DCF Valuation Step by Step

A DCF value is a descriptive computation under stated assumptions.

highlighted = computed this step

Inputs drive the output

A DCF value under assumptions is entirely the output of its inputs: projected cash flows, discount rate, and terminal growth.

\text{inputs: projected FCFs, } r,\text{ terminal } g

Sensitivity

Changing the discount rate or terminal growth changes the DCF value under assumptions. With the same $100.00 projected cash flow and 10% discount rate, the level perpetuity gives $1,000.00, while 4% perpetual growth gives $1,733.33.

\text{level: }\$1,000.00,\quad \text{growth: }\$1,733.33

Not a recommendation

A DCF value is a descriptive computation under stated assumptions. It is not a price target, not a fair value claim, not a buy or sell recommendation, and nothing here is investment advice.

\text{descriptive computation, not investment advice}