A discounted cash flow (DCF) model that calculates enterprise value from projected free cash flows. Includes a WACC calculator, terminal value using both perpetuity growth and exit multiple methods, and a sensitivity table for key assumptions.
What's included
Template preview
Step by step
Use your three-statement model or P&L forecast to project free cash flow (FCF) for each year of the projection period (typically five years).
Enter your cost of equity (using CAPM), cost of debt, and capital structure. The template calculates the weighted average cost of capital (WACC).
Choose between the perpetuity growth method (Gordon Growth Model) or exit multiple method. The template calculates both so you can compare.
The template discounts all projected FCFs and the terminal value back to present value using WACC. The sum is your enterprise value.
Subtract net debt, minority interests, and preferred equity from enterprise value to arrive at equity value (the value attributable to shareholders).
Watch out
Using an unrealistically low WACC — small changes in WACC have a large impact on valuation
Setting the terminal growth rate above the long-term GDP growth rate (typically 2-3%)
Double-counting growth by using high FCF growth in the projection period and a high terminal multiple
Forgetting to subtract net debt when bridging from enterprise value to equity value
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