Projected Cash Flows (Present Value)
Valuation Comparison
Assumptions
10%
2.5%
10%
5 years
How it works
This tool uses a Discounted Cash Flow (DCF) model to estimate intrinsic value based on projected future cash flows.
1. Project Cash Flows (10 years)
FCFyear = FCFTTM × (1 + growth rate)year
Growth rate is applied at full rate during the high growth period, then fades linearly to terminal rate over an equal number of years.
2. Discount to Present Value
PV = FCFyear ÷ (1 + discount rate)year
3. Terminal Value (Gordon Growth)
TV = FCFfinal × (1 + terminal rate) ÷ (discount rate − terminal rate)
Represents all cash flows beyond year 10, assuming perpetual growth at terminal rate.
4. Intrinsic Value
Intrinsic Value = (Sum of PVs + PV of TV) ÷ Shares Outstanding
5. Recommendation
BUY if intrinsic value exceeds price by 15%+
SELL if intrinsic value is below price by 15%+
HOLD otherwise