Discounted Cash Flow Details

To use the Discounted Cash Flow Method you need to provide these inputs:

• Business earnings forecast for any length of time desired.
• Discount rate which captures the company’s risk.
• Terminal value model to apply at the end of the earnings forecast period.

The method calculates a terminal value from your chosen model, then applies a discounting formula to all inputs in order to determine the present value - what the business is worth today.

ValuAdder Worksheets give you the tools to create highly reliable earnings forecasts, assess the company’s risk, and calculate the business terminal value for your business valuation:

• Advanced regression analysis to create cash flow forecasts.
• Standard build-up and weighted average cost of capital (WACC) models to compute the discount rate.
• Constant Growth (Gordon) and Exit Multiples Models to calculate the terminal value as an intermediate result used in the final DCF calculation.