Course Content

Mastering Discounted Cash Flow Analysis with Excel

1. Introduction to Business Valuation

What You'll Learn About DCF and Business Valuation Why Valuing a Business Matters for Investors and Owners Overview of Business Valuation Methods

2. Understanding Discounted Cash Flow (DCF) Analysis

Introduction to the Discounted Cash Flow Valuation Method DCF Money Printing Machine Example DCF Formula Calculations

3. Cash Flow Forecasting and Discount Rate Fundamentals

How to Calculate Unlevered Free Cash Flow (UFCF)Understanding the Discount Rate in Valuation How to Calculate Cost of Debt Cost of Debt Calculation Example How to Calculate Cost of Equity (CAPM)How to Calculate Cost of Equity Using Build Up Method Cost of Equity Calculation Example

4. WACC, Terminal Value & Sensitivity Analysis

Weighted Average Cost of Capital (WACC) Calculation Terminal Value (TV) and Perpetuity Growth Rate (g)Terminal Value Calculation Example Sensitivity Analysis in DCF Valuation

5. Building a DCF Valuation Model in Excel

Company Overview and Valuation Objective Exploring the Excel-Based DCF Model Modeling the Income Statement Items Modeling the Balance Sheet Items Creating Clean Income Statement Output Creating Clean Balance Sheet Output Building the UFCF Model: From EBIT to Operating Cash Flow Accounting for CapEx, Assets & Reconciliation to Net Cash Flow Forecasting UFCF and Linking Cash Flow to the Balance Sheet Final DCF Calculation and Valuation Output Visualizing Results with Excel Charts Performing Sensitivity Analysis in Excel

6. Practical DCF Case Study – Company Valuation in Action

DCF Assignment Walkthrough: From Inputs to Enterprise Value

Final DCF Calculation and Valuation Output

With all components built—from revenue assumptions to UFCF forecasts—you're finally ready to calculate the company's value using the Discounted Cash Flow (DCF) method.

The DCF boils down to one concept: cash today is worth more than cash tomorrow. That's why future cash flows must be discounted using a rate that reflects risk and time. This rate is the WACC, or Weighted Average Cost of Capital.

The WACC accounts for:

The cost of equity (what investors expect in return);
The cost of debt (what the company pays lenders);
The company's capital structure (equity vs. debt proportions);
And the effect of taxes on debt interest.

Equally important is the Perpetuity Growth Rate (g), used to estimate how the business will grow beyond the explicit forecast period. It represents the long-term, stable growth rate expected after the final projection year.

To determine the value, you'll discount:

All UFCF forecasts from 2024–2028;
Plus a Terminal Value representing all future cash flows after 2028.

The full formula looks like this:

\text{DCF} = \sum_{t=1}^{n} \frac{UFCF_t}{(1 + WACC)^t} + \frac{TV}{(1 + WACC)^n}

Where:

TV = \frac{UFCF_{n+1}}{WACC - g}

It's crucial that the forecasted UFCF aligns logically with your earlier assumptions. Overestimating growth or underestimating risk can distort valuation drastically.

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Section 5. Chapter 10

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