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Free Cash Flow for the Firm (FCFF) Stable Growth Excel Model
  • Free Cash Flow for the Firm (FCFF) Stable Growth Excel Model
Originally published: 22/06/2016 08:38
Last version published: 02/02/2018 14:49
Publication number: ELQ-32505-2
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Free Cash Flow for the Firm (FCFF) Stable Growth Excel Model

An Excel FCFF Excel Model to Value a stable firm on the basis of free cashflows to firm.

Prof. Aswath Damodaranby Prof. Aswath Damodaran
Professor at NYU Stern School of BusinessFollow 1,105
NYU Stern School of Businesswith NYU Stern School of Business
An Education in PossibleFollow 67
21 reviews1,747 views|Start the discussion!|Bookmark download for free
financevaluationfree cash flow for the firmfcffstable growth model
Description
A stable growth FCFF discount excel model.

User defined inputs.

The user has to define the following inputs to the model:
1. Current EBIT and tax rate
2. Capital Spending and Depreciation
3. Change in working capital
4. Debt ratio
5. Cost of Equity or Inputs to the CAPM (Beta, Riskfree rate, Risk Premium) and Cost of Debt
6. Expected Growth Rate in free cashflows to firm forever.

- Prof. Aswath Damodaran

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This Best Practice includes
1 Excel Model File

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Further information

Outputs:
EBIT (1- tax rate)
- (Capital Spending - Depreciation)
- Change in Working Capital
Free Cashflow to Firm

Cost of Equity
Cost of Debt
Cost of Capital
Expected Growth rate

Value of Firm

Best suited for firms growing at the same rate as the economy

Assumptions in the model:
1. The firm is in steady state and will grow at a stable rate forever.
2. The firm's leverage is known and constant.


4.9 / 5 (21 votes)

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