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B Basic

The idea of a DCF7m
Unlevered free cash flowPro9m
Cost of equity and CAPMPro8m
WACCPro9m

A Advanced

Terminal valuePro10m
Discounting and the walk to share pricePro11m
Sensitivities and what moves the answerPro8m

FlashcardsPro0/26
Basic quizPro80% passes
Advanced quizPro80% passes
Terms

DCF

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Flashcards Start the first lesson

Build a discounted cash flow from the ground up: free cash flow, the discount rate, terminal value, and the walk to a share price. Then learn which inputs actually move the answer.

BBasic4 lessons

1The idea of a DCFA business is worth the cash it will produce, adjusted for when it arrives and how risky it is. A DCF is that sentence turned into arithmetic.7 min
2Unlevered free cash flowProThe cash the business throws off before anyone who financed it gets paid. It starts at EBIT and adjusts for taxes, non cash charges, and reinvestment.9 min
3Cost of equity and CAPMProShareholders want a return for bearing risk. CAPM estimates how much, using the risk free rate, the stock's beta, and the extra return investors demand for owning stocks.8 min
4WACCProThe weighted average cost of capital blends what lenders and shareholders each require, weighted by how much of each the company uses. It is the rate for discounting unlevered free cash flow.9 min
Basic quizPro8 questions, 80% passes

AAdvanced3 lessons

5Terminal valueProThe forecast ends but the company does not. Terminal value captures every year after the forecast in one number, either with a perpetual growth rate or with an exit multiple.10 min
6Discounting and the walk to share priceProDiscount each year's cash flow and the terminal value, add them to get enterprise value, then bridge to equity value and divide by diluted shares.11 min
7Sensitivities and what moves the answerProA DCF is a range, not a number. Sensitivity tables show how far the answer moves when the two most uncertain inputs move.8 min
Advanced quizPro8 questions, 80% passes