Guided Walkthroughs
Full DCF — Step 10 of 12: Discount everything back at the 10% WACC and compute enterprise value (year-end convention).
Model answer
Discount factors at 10%: 1.10 / 1.21 / 1.331 / 1.4641 / 1.61051 for Years 1–5. PV of UFCF: 13.5/1.10 = 12.27; 15.0/1.21 = 12.40; 16.5/1.331 = 12.40; 18.0/1.4641 = 12.29; 19.5/1.61051 = 12.11. Sum of…
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More from Guided Walkthroughs
- Full DCF — Step 1 of 12: Set up the model. SteadyCo has $100M of revenue in Year 0. What operating assumptions do you need before you can project unlevered free cash flow, and what are ours?
- Full DCF — Step 2 of 12: Project SteadyCo's revenue and EBITDA for Years 1–5.
- Full DCF — Step 3 of 12: From EBITDA, get to EBIT and NOPAT for each year. Why does a DCF tax EBIT rather than pre-tax income?
- Full DCF — Step 4 of 12: State the unlevered FCF formula and compute Year 1 unlevered FCF for SteadyCo.
- Full DCF — Step 5 of 12: Complete the 5-year unlevered FCF projection.
- Full DCF — Step 6 of 12: Build SteadyCo's cost of equity. Inputs: risk-free rate 4.0%, equity risk premium 5.0%, levered beta 1.4.