DCF Basics

What you'll learn

• ✓Build a simple DCF
• ✓Pick a discount rate

Lessons

1. 🧭
   What Is a Company Worth?

   The one question DCF tries to answer
   Start →
2. Forecasting Free Cash Flows

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3. The Discount Rate (WACC, gently)

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4. Terminal Value

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5. Build a Tiny DCF

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6. Final Boss: A Tool, Not a Recipe

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Investment Valuation (3rd ed.)
  Aswath Damodaran (Wiley) · book
  Primary reference for DCF mechanics, FCF definitions, terminal value, and the 'garbage in, garbage out' framing used in the boss lesson.
• Valuation: Measuring and Managing the Value of Companies (Koller, Goedhart, Wessels)
  McKinsey & Company / Wiley · book
  Source for FCFF formula, WACC mechanics, and the empirical fact that terminal value typically accounts for 60 to 80 percent of total DCF value.
• Principles of Corporate Finance (Brealey, Myers, Allen)
  McGraw-Hill · book
  Reference for WACC formula, cost of equity vs cost of debt, after-tax debt cost, and the sensitivity of present value to discount rate.
• Dividends, Earnings, and Stock Prices
  Myron J. Gordon, Review of Economics and Statistics, 1959 · academic
  Original source for the Gordon growth model used in the terminal value lesson: TV = FCF * (1 + g) / (r - g).
• Damodaran Online: Risk Premiums, Cost of Capital, and Valuation Data
  Aswath Damodaran, NYU Stern · data
  Public dataset for equity risk premiums, country risk premiums, and industry-level WACC estimates referenced when describing realistic discount rates by sector and geography.
  https://pages.stern.nyu.edu/~adamodar/