Summary  
This chapter explains how to construct a discounted cash flow model by forecasting future cash flows and computing their present value using a discount rate, including calculating the weighted average cost of capital and terminal value.  

General domain of usage  
Business valuation

**Discounted Cash Flow (DCF)** method estimates a company's value by projecting its future cash flows and adjusting them to today's value using a discount rate. It reflects not just expected earnings, but also the risk and timing of those earnings.

Definition

Before diving into formulas and spreadsheets, it's essential to understand why **Discounted Cash Flow (DCF)** is considered one of the most robust methods for business valuation. At its core, DCF is based on a simple idea: **the value of money changes over time**.

Learn how to confidently value a business using Discounted Cash Flow (DCF) modeling. This practical course walks you through the entire valuation process—from understanding key financial concepts to building a complete DCF model in Excel. You'll explore core topics like free cash flows, discount rates, cost of equity, WACC, terminal value, and scenario analysis. With step-by-step examples, downloadable templates, and a real-world case study, you'll gain hands-on experience applying DCF in professional settings. Whether you're an aspiring analyst, investor, or business owner, this course gives you the tools to calculate intrinsic value and make informed financial decisions.

Explore the fundamentals of business valuation and discover why understanding company value is essential for investors, entrepreneurs, and financial professionals. Learn key valuation methods and when to use them.

Get a clear grasp of DCF analysis—one of the most trusted valuation methods in finance. Understand how DCF works, view simplified examples, and demystify key formulas without relying on Excel.

Learn how to calculate free cash flows, cost of equity, and cost of debt—all essential inputs in building accurate DCF models. Includes step-by-step examples and a breakdown of the WACC formula.

Master advanced valuation components such as risk premiums, terminal value, and sensitivity analysis. This section helps you fine-tune your DCF model and account for uncertainty in projections.

Apply your knowledge by building a real-world DCF model in Excel. This hands-on section walks through every step using a common company and includes a downloadable, customizable template.  

Put your DCF skills to the test by valuing a real company from scratch. Analyze financials, apply your model, and determine the intrinsic value using a structured, real-world case study.

What You'll Learn About DCF and Business Valuation