Discounted Cash Flow (DCF) Model Template + Instructions
Originally published: 23/03/2018 11:27
Last version published: 14/06/2018 09:03
Publication number: ELQ-98749-3
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Discounted Cash Flow (DCF) Model Template + Instructions

Learn how to build a simple DCF Model aligned with Investment Banking best practices.

This video alongside DCF Model template in Excel will teach you how to build a basic Discounted Cash Flow Model.

So what does a DCF entail and why do we use it?

A basic DCF model involves projecting future cash flows and discounting them back to the present using a discount rate that reflects the riskiness of the capital. You then add up all of those discounted cash flows, and the sum is really the intrinsic value of the company. And so, many people in industry compare that value to market values to determine if something is over-valued, under-valued, or valued correctly. So it really is an important form of valuation. Almost all people in finance use this valuation to a certain degree. It's also worth noting that there are many different variations of the DCF, but there are generally two different types; unlevered and levered. Unlevered DCFs are before the payments of debt- what this model is. Levered is after interest expense and after debt paid on, given that unlevered free cash flow analysis are the most commonly used, this is the focus here for the purpose of the video.

Video Length: 11 minutes 6 seconds

This Best Practice includes
1 DCF Model Quick Lesson in Excel, 1 Video

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