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.
- Business terminal value at the end of the earnings forecast period.
The method applies a discounting formula to these inputs in order to calculate the present value or 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) Model to calculate the terminal value.