FocusInvestor.com: The Focused Few Version 1.

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A special note of thanks goes to John Kish, Devon Everhart, Futile France, and Kuang-Yu Liu for their assistance on this project. Decent overview of the workings of a DCF Model click here

Introduction to the FocusInvestor.com Discounted Cash Flow Excel Calcu One method an investor could use to determine the value of a company involves conducting a discounted cash flow analysis. An example of a series of assumptions an investor could use to calculate a companies intrinsic value under the Three-Stage DC 1: an initial cash flow of $10,000 2: a discount rate of 15% (the user should insert his required return here) 3: cash flows grow at a 14% rate for the first 5 years, a 10% rate for the next 5 years, and a 5% rate for the final 5 year period 4: the investor uses a terminal growth rate of 3% 5: the company has 10,000 shares outstanding and pays no dividends.

Boxes that are highlighted in black are where users can plug in their own assumptio

Discounted cash flow (DCF) As the name implies, a companies future cash flows are discounted back to the present to derive w question. The DCF Model is certainly not a perfect valuation tool (as it is very difficult to predict what a company will grow it estimate of value that, when combined with all the other components of a users research on a company, can help give an idea o should also keep in mind that the Intrinsic Value that is produced is only as good as the numbers put into the model. If you as value) you will get an unrealistic intrinsic value result. The investor should think of the Intrinsic Value figure given in this lig lower, in order to achieve a given return (i.e. the discount rate) on your investment if your assumptions are correct.

Limitations of my excel DCF Models: You can only use 5 year time periods unless you modify the spreadsheet. I will continue Terminal Value: The PV of the all the companies future cash flows. Terminal Value Growth Rate: The rate that you expect the company to indefinitely grow its cash flows by.

Discount Rate: The investors required rate of return. NOTE: (If your growth rate is higher than your discount rate, the mo

Note: This is a beta copy and as such may have some bugs. If any are found please email focusinvestor@yahoo.com so they

odify the spreadsheet. s cash flows by. insic value under the Three-Stage DCF. If you assume unrealistic growth rates (or terminal ntrinsic Value figure given in this light: you need to pay the price given. Devon and Kuang-Yu Liu for their on this project. but it can provide one n a company. can help give an idea of what a company is worth.s goes to John Kish. of a DCF Model click here counted Cash Flow Excel Calculator ng a discounted cash flow analysis. The user umbers put into the model. her than your discount rate. are: a 5% rate for the final 5 year period sers can plug in their own assumptions ounted back to the present to derive what a valuation for the company in predict what a company will grow its cash flows at). for example.com so they can be corrected. or assumptions are correct. the model will not function properly) ail focusinvestor@yahoo. I will continue to work on this issue. .

00 .000 $330.com: The Focused Few Initial Cash Flow: Growth Rate: Discount Rate: Shares Outstanding: Present Value of All Cash Flows: Intrinsic Value: $15.000 $33.FocusInvestor.000 10% 15% 10.

462 $196.303.60 33% .588.000 296.030.000 $59.065 29.000 1-5 10% 1% 29.574.000 358.433 Terminal Year PV of Year 1-10 Cash Flows: Terminal Value: Total PV of Cash Flows: Number of Shares: Intrinsic Value (IV): Margin of Safety IV: What Percentage of IV comes from the Terminal Value: $508.318.539.950 414.114.882 456.479.42 $41.FocusInvestor.725.826.500.000.412.734 Growth 10% 10% 10% 10% 10% 5% 5% 5% 5% 5% 6-10 5% Discount Rate: Margin of Safety: 15% 30% Debt Level: Year 1 2 3 4 5 6 7 8 9 10 Value $234.173.867 $136.698 435.400.769.196 $2.970.000 326.347.826 479.090.018.158.450.608.756 $205.500 394.001.704.617 $124.624.826 $224.334.000 $978.711 $149.790 $214.318 503.400.000 Flows 269.095.000.621 $1.com: The Focused Few Initial Cash Flow: Years: Growth Rate: Terminal Growth Rate: Shares Outstanding: $245.922 $163.485 $179.869 $898.

220.053.083.459.000 Flows 48.313 $40.408.395.982 $42.378.097.054 $41.340.378.263.853.570.000 $225.850 58.200.313 $40.116 Growth 10% 10% 10% 10% 10% 12% 12% 12% 12% 12% 15% 15% 15% 15% 15% 6-10 12% 11-15 15% Discount Rate: Margin of Safety: 12% 30% Debt Level: Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Value $43.313 $40.810.407 $43.313 $41.964 $41.216 111.248 165.132.699.630 89.710.511 $423.537 $629.160.691.36 $19.278 219.com: The Focused Few Initial Cash Flow: Years: Growth Rate: Terminal Growth Rate: Shares Outstanding: $44.972.691 Terminal Year PV of Year 1-15 Cash Flows: Terminal Value: Total PV of Cash Flows: Number of Shares: Intrinsic Value: Margin of Safety IV: What Percentage of IV comes from the Terminal Value: $254.242.000 $28.286 190.603.313 $40.464 $40.242 125.185.378.859.000 1-5 10% 1% 29.378.200.912 144.970 252.378.313 $40.975.731.112.384 79.500 53.235 64.621.FocusInvestor.076 $1.965.881.000.587 29.764.586 99.875 $42.508 $46.378.463.686 $44.85 40% .259 71.

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