Discounted Cash Flow Valuation Made Simple
This course will teach you everything you need to know about building a discounted cash flow valuation (DCF) model. One of the most important methods of valuation, the DCF often proves too challenging to master. This course, however, distills the process of building a DCF model into six simple steps and utilizes interactive exercises to ensure that the student understands the key components of of the DCF.
This section discusses the methods used to calculate the discount rate. Students will gain an understanding of what the discount rate is used for as well as the mechanics of the capital asset pricing model and the weighted average cost of capital.
Students will learn the basics of building cash flow projections.
Students will learn the present value formula and apply it to future cash flow projections.
Students will learn methods for calculating the terminal value including how to value a perpetuity without growth as well as a perpetuity with growth.
Students will learn how to discount terminal value to present value.
Students will learn how to finalize the valuation model by summing present valued cash flows.