Instagram Image Template Excel

Instagram Image Template Excel

DCF Model Template

This DCF model template provides you with a foundation to build your own discounted cash flow model with different assumptions.

Below is a preview of the DCF model template:

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DCF Model Template

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DCF Step 1 – Build a forecast

The first step in the DCF model process is to build a forecast of the three financial statements, based on assumptions about how the business will perform in the future. On average, this forecast typically goes out about 5 years. The forecast has to build up tounlevered free cash flow Unlevered Free Cash Flow Unlevered Free Cash Flow is a theoretical cash flow figure for a business, assuming the company is completely debt free with no interest expense.  (free cash flow to the firm or FCFF).

DCF Step 2 – Calculate the Terminal Value

We continue walking through the DCF model steps with calculating theterminal value Knowledge CFI self-study guides are a great way to improve technical knowledge of finance, accounting, financial modeling, valuation, trading, economics, and more. . There are two approaches to calculating a terminal value: perpetual growth rate Perpetuity Perpetuity is a cash flow payment which continues indefinitely. An example of a perpetuity is the UK's government bond called a Consol. and exit multiple.

DCF Step 3 – Discount the cash flows to get the present value

In step 3 of this DCF walk through it's time to discount the forecast period (from step 1) and the terminal value (from step 2) back to the present value using a discount rate. The discount rate used is typically the company's weighted average cost of capital (WACC) WACC WACC is a firm's Weighted Average Cost of Capital and represents its blended cost of capital including equity and debt. .

The best way to calculate the present value in Excel is with theXNPV function, which can account for unevenly spaced out cash flows (which are very common).

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