Guided Walkthroughs
Full DCF — Step 12 of 12: Before presenting $10.48–10.65 per share, what sanity checks and sensitivities would you run?
Model answer
- TV weight: PV(TV) 178.2 of EV 239.6 ≈ 74% of value — within the typical 60–80% band, but it means the answer lives or dies on terminal assumptions, so say so.
- Cross-method check: Gordon vs…
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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.