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Decent overview of the workings of a DCF Model click here

Introduction to the FocusInbvestor.com Discounted Cash Flow Excel Calc

One method an investor could use to determine the value of a company involves conducting a discounted cash flow analysis.
An example of a series of assumptions an investor could use to calculate a companies intrinsic value under the Three-Stage DC

1: an initial cash flow of $10,000

2: a discount rate of 15% (the user should insert his required return here)
3: cash flows grow at a 14% rate for the first 5 years, a 10% rate for the next 5 years, and a 5% rate for the final 5 year period
4: the investor uses a terminal growth rate of 3%
5: the company has 10,000 shares outstanding and pays no dividends.

Boxes that are highlighted in black are where users can plug in their own assumpti

Discounted cash flow (DCF) As the name implies, a companies future cash flows are discounted back to the present to derive w
The DCF Model is certainly not a perfect valuation tool (as it is very difficult to predict what a company will grow its cash flo
value that, when combined with all the other components of a users research on a company, can help give an idea of what a co
mind that the Intrinsic Value that is produced is only as good as the numbers put into the model. If you assume unrealistic gro
unrealistic intrinsic value result. The investor should think of the Intrinsic Value figure given in this light: you need to pay the
given return (i.e. the discount rate) on your investment if your assumptions are correct.

Limitations of my excel DCF Models: You can only use 5 year time periods unless you modify the spreadsheet. I will continue

Terminal Value: The PV of the all the companies future cash flows.

Terminal Value Growth Rate: The rate that you expect the company to indefinitely grow its cash flows by.

Discount Rate: The investors required rate of return. NOTE: (If your growth rate is higher than your discount rate, the mo

Note: This is a beta copy and as such may have some bugs. If any are found please email focusinvestor@yahoo.com so the
of a DCF Model click here

counted Cash Flow Excel Calculator

g a discounted cash flow analysis.
nsic value under the Three-Stage DCF, for example, are:

a 5% rate for the final 5 year period

sers can plug in their own assumptions

unted back to the present to derive what a valuation for the company in question.
hat a company will grow its cash flows at), but it can provide one estimate of
y, can help give an idea of what a company is worth. The user should also keep in
model. If you assume unrealistic growth rates (or terminal value) you will get an
ven in this light: you need to pay the price given, or lower, in order to achieve a

dify the spreadsheet. I will continue to work on this issue.

cash flows by.

er than your discount rate, the model will not function properly)

il focusinvestor@yahoo.com so they can be corrected.

 FocusInvestor.com: The Focused Few

Initial Cash Flow: $15,000

Growth Rate: 10%

Discount Rate: 15%

Shares Outstanding: 10,000

Present Value of All Cash Flows: $330,000

Intrinsic Value: $33.00

 FocusInvestor.com: The Focused Few

Initial Cash Flow: $245,000,000

Years: 1-5 6-10

Growth Rate: 10% 5%

Terminal Growth Rate: 1% Discount Rate: 15%

Shares Outstanding: 29,400,000 Margin of Safety: 30%

Debt Level: $978,000,000

Year Flows Growth Value

1 269,500,000 10% $234,347,826
2 296,450,000 10% $224,158,790
3 326,095,000 10% $214,412,756
4 358,704,500 10% $205,090,462
5 394,574,950 10% $196,173,485
6 414,303,698 5% $179,114,922
7 435,018,882 5% $163,539,711
8 456,769,826 5% $149,318,867
9 479,608,318 5% $136,334,617
10 503,588,734 5% $124,479,433

Terminal Year $508,624,621

PV of Year 1-10 Cash Flows: $1,826,970,869

Terminal Value: $898,030,196

Total PV of Cash Flows: $2,725,001,065

Number of Shares: 29,400,000

Intrinsic Value (IV): $59.42

Margin of Safety IV: $41.60

What Percentage of IV comes from 33%

the Terminal Value:
 FocusInvestor.com: The Focused Few

Initial Cash Flow: $44,185,000

Years: 1-5 6-10 11-15

Growth Rate: 10% 12% 15%

Terminal Growth Rate: 1% Discount Rate: 12%

Shares Outstanding: 29,200,000 Margin of Safety: 30%

Debt Level: $225,000,000

Year Flows Growth Value

1 48,603,500 10% $43,395,982
2 53,463,850 10% $42,621,054
3 58,810,235 10% $41,859,964
4 64,691,259 10% $41,112,464
5 71,160,384 10% $40,378,313
6 79,699,630 12% $40,378,313
7 89,263,586 12% $40,378,313
8 99,975,216 12% $40,378,313
9 111,972,242 12% $40,378,313
10 125,408,912 12% $40,378,313
11 144,220,248 15% $41,459,875
12 165,853,286 15% $42,570,407
13 190,731,278 15% $43,710,686
14 219,340,970 15% $44,881,508
15 252,242,116 15% $46,083,691

Terminal Year $254,764,537

PV of Year 1-15 Cash Flows: $629,965,511

Terminal Value: $423,132,076

Total PV of Cash Flows: $1,053,097,587

Number of Shares: 29,200,000

Intrinsic Value: $28.36

Margin of Safety IV: $19.85

What Percentage of IV comes from 40%

the Terminal Value: