FocusInvestor.com: The Focused Few Version 1.

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 Calc 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 assumpti

Discounted cash flow (DCF) As the name implies, a companies future cash flows are discounted back to the present to derive The DCF Model is certainly not a perfect valuation tool (as it is very difficult to predict what a company will grow its cash flo value that, when combined with all the other components of a users research on a company, can help give an idea of what a co mind that the Intrinsic Value that is produced is only as good as the numbers put into the model. If you assume unrealistic gro unrealistic intrinsic value result. The investor should think of the Intrinsic Value figure given in this light: you need to pay th 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

s goes to John Kish, Devon and Kuang-Yu Liu for their on this project.

of a DCF Model click here

counted Cash Flow Excel Calculator ng a discounted cash flow analysis. nsic value under the Three-Stage DCF, for example, are:

a 5% rate for the final 5 year period

users can plug in their own assumptions

ounted back to the present to derive what a valuation for the company in question. hat a company will grow its cash flows at), but it can provide one estimate of y, can help give an idea of what a company is worth. The user should also keep in model. If you assume unrealistic growth rates (or terminal value) you will get an ven in this light: you need to pay the price given, or lower, in order to achieve a

dify the spreadsheet. I will continue to work on this issue.

cash flows by.

er than your discount rate, the model will not function properly)

il focusinvestor@yahoo.com so they can be corrected.

FocusInvestor.com: The Focused Few Initial Cash Flow: Growth Rate: Discount Rate: Shares Outstanding: Present Value of All Cash Flows: Intrinsic Value: $15,000 10% 15% 10,000 $330,000 $33.00

FocusInvestor.com: The Focused Few Initial Cash Flow: Years: Growth Rate: Terminal Growth Rate: Shares Outstanding: $245,000,000 1-5 10% 1% 29,400,000 $978,000,000 Flows 269,500,000 296,450,000 326,095,000 358,704,500 394,574,950 414,303,698 435,018,882 456,769,826 479,608,318 503,588,734 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 $234,347,826 $224,158,790 $214,412,756 $205,090,462 $196,173,485 $179,114,922 $163,539,711 $149,318,867 $136,334,617 $124,479,433

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:

$508,624,621 $1,826,970,869 $898,030,196 $2,725,001,065 29,400,000 $59.42 $41.60 33%

FocusInvestor.com: The Focused Few Initial Cash Flow: Years: Growth Rate: Terminal Growth Rate: Shares Outstanding: $44,185,000 1-5 10% 1% 29,200,000 $225,000,000 Flows 48,603,500 53,463,850 58,810,235 64,691,259 71,160,384 79,699,630 89,263,586 99,975,216 111,972,242 125,408,912 144,220,248 165,853,286 190,731,278 219,340,970 252,242,116 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 $43,395,982 $42,621,054 $41,859,964 $41,112,464 $40,378,313 $40,378,313 $40,378,313 $40,378,313 $40,378,313 $40,378,313 $41,459,875 $42,570,407 $43,710,686 $44,881,508 $46,083,691

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:

$254,764,537 $629,965,511 $423,132,076 $1,053,097,587 29,200,000 $28.36 $19.85 40%