DCF valuation estimates intrinsic value by forecasting future free cash flows and discounting them to present value using a discount rate (usually WACC).
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Pro Tip
Always run sensitivity analysis - vary the discount rate and growth rate to see the full range of possible values.
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Did You Know?
Terminal value typically represents 60-80% of a DCF valuation, making the long-term growth rate the most impactful assumption.
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