DCF Modeling

Estimated completion: 1.25 hours

DCF valuation can be one of the most intricate valuation methodologies. Small changes in assumptions often result in large changes in value. Learn to construct a DCF model and complete a WACC analysis similar to those found in any finance role.

• Calculating unlevered free cash flow
  • Ensuring cash flows have reached a steady state by the terminal year
• Calculating WACC
  • Cost of equity vs. debt
  • Target capital structure
  • Determining the after-tax cost of debt and associated tax shield
  • Calculating the cost of equity using CAPM
    • Risk-free rate
    • Market risk premium
    • Unlevering and relevering beta
    • Small-cap “size” premium
• Calculating the terminal value
  • Perpetuity growth method
  • Exit multiple method
• Building a discounting model
• Mid-year adjustments
• Calculating enterprise and equity values
• Implied multiples and perpetuity growth rates
• Sensitivity analysis via data tables