Wednesday, 11 April 2012

Simple DCF


At the end of the day, every company is worth whatever the current value of all its future cash flows are discounted backward to today's terms.

It is a hint, not an answer.  Based on a lot of assumptions, using conservative figures.

1st 10 years Cash flow. using OWNERS EARNINGS (FCF).
Cash flow beyond the 10th year (Terminal value):  Assumes growth at 3% per year.
Add all the above discounted cashflows to get the present value..

Only the FCFs are hard data, all others are assumptions.

Time 14.13

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