{
  "id": 39613,
  "date": "2023-01-08T11:50:00",
  "date_gmt": "2023-01-08T16:50:00",
  "guid": { "rendered": "https:\/\/finance-able.com\/?p=39613" },
  "modified": "2025-12-21T16:50:27",
  "modified_gmt": "2025-12-21T21:50:27",
  "slug": "walk-me-through-a-dcf",
  "status": "publish",
  "type": "post",
  "link": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/",
  "title": {
    "rendered": "Walk Me Through a DCF in 5 Steps – The Ultimate Guide"
  },
  "content": {
    "rendered": "\n<p>Learn how to answer the interview question, <strong>\u2018Walk Me Through a DCF\u2019<\/strong> like a pro and land your dream job in <a href=\"https:\/\/finance-able.com\/investment-banking-career-path\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-theme-palette-1-color\">Investment Banking<\/mark><\/strong><\/a>, <a href=\"https:\/\/finance-able.com\/private-equity-vs-venture-capital\/\"><strong>Private Equity<\/strong><\/a>, or <a href=\"https:\/\/finance-able.com\/hedge-fund-vs-mutual-fund\/\"><strong>Investment Management<\/strong><\/a>. We\u2019ll break everything down with a simple <strong>5-Step Framework <\/strong>as well as tips on how to avoid <strong>common pitfalls<\/strong>.<\/p>\n\n\n\n<p class=\"yoast-reading-time__wrapper\"><span class=\"yoast-reading-time__icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-icon=\"clock\" width=\"20\" height=\"20\" fill=\"none\" stroke=\"currentColor\" style=\"display:inline-block;vertical-align:-0.1em\" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 24 24\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M12 8v4l3 3m6-3a9 9 0 11-18 0 9 9 0 0118 0z\"><\/path><\/svg><\/span><span class=\"yoast-reading-time__spacer\" style=\"display:inline-block;width:1em\"><\/span><span class=\"yoast-reading-time__descriptive-text\">Estimated reading time: <\/span><span class=\"yoast-reading-time__reading-time\">17<\/span><span class=\"yoast-reading-time__time-unit\"> minutes<\/span><\/p>\n\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-tl-dr\"><strong>TL;DR<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Initially, keep your answer <strong>high-level<\/strong> for <strong>\u2018Walk Me Through a DCF\u2019<\/strong>\u2026and let the interviewer pull you into the details.<\/li>\n\n\n\n<li>You need to understand the <strong>underlying concepts<\/strong> to master this question\u2026just memorizing formulas is a recipe for disaster.<\/li>\n\n\n\n<li>You can answer this question in just <strong>5 simple steps<\/strong> which we\u2019ve listed below.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-little-context-on-walk-me-through-a-dcf\"><strong>A Little Context on&#8230;\u2018Walk Me Through a DCF\u2019<\/strong><\/h2>\n\n\n\n<p>One of the <strong>most common Investment Banking Interview questions<\/strong> is <strong>\u2018Walk Me Through a DCF&#8217;<\/strong>. It is easily one of the <strong>Top 10 <\/strong><a href=\"https:\/\/finance-able.com\/investment-banking-interview-questions\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-theme-palette-1-color\">Investment Banking Interview Questions<\/mark><\/strong><\/a> and it can be intimidating to newcomers. <\/p>\n\n\n\n<p><strong>Many students aiming for top-tier Finance simply memorize the DCF formulas to answer this question<\/strong>. <strong>But they quickly find themselves in a jam when they can\u2019t explain the underlying concepts.<\/strong> &nbsp;<\/p>\n\n\n\n<p>You can make it easy with the simple <strong>Framework<\/strong> and <strong>Plain English<\/strong> explanations we share here. First though, just a few points on <strong><em>why<\/em><\/strong> <strong>Interviewers ask this particular question<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-1024x576.png\" alt=\"Image showing an interviewer asking an interviewee the question\" class=\"wp-image-39643\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-1536x864.png 1536w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1-Confused-Interviewee.png 1920w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-discounted-cash-flow-dcf-and-why-does-it-matter\"><strong>What is Discounted Cash Flow (DCF) and Why Does it Matter?<\/strong><\/h2>\n\n\n\n<p>A common (and fair!) question is, &#8220;<strong><em>What is the point of a DCF in the first place?<\/em><\/strong>&#8220;.<\/p>\n\n\n\n<p><strong>Discounted Cash Flow Analysis<\/strong> (or <strong>DCF<\/strong>) is <em>the<\/em> core method of <strong>Business Valuation<\/strong> professionals use across the <strong>Finance<\/strong> world (<strong>Investment Banking<\/strong>, <strong>Private Equity<\/strong>, <strong>Investment Management<\/strong>, and <strong>Corporate M&amp;A<\/strong>). <\/p>\n\n\n\n<p>It\u2019s one of the <strong>Three Primary Methods<\/strong> of Business Valuation. The other two methods of <strong>Business Valuation<\/strong> (<strong>Trading<\/strong> <strong>and Transaction Comparables<\/strong>) are \u2018shorthand\u2019 analyses underpinned by the <strong>DCF<\/strong> approach. <\/p>\n\n\n\n<p>For now, the short story is that the <strong>DCF method<\/strong> is <strong><u>central<\/u><\/strong> to <strong>Business Valuation<\/strong>. As a result, interviewers ask this question a <strong><u>LOT<\/u><\/strong> to gauge whether prospective employees <strong>truly \u2018get it\u2019<\/strong>.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-d28b3ae8\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-big-picture-amp-common-pitfalls-walk-me-through-a-dcf\"><strong>The Big Picture &amp; Common Pitfalls: &#8216;Walk Me Through a DCF&#8217;<\/strong><\/h2>\n\n\n\n<p>Before we get into the <strong>5 Step Framework<\/strong>, let&#8217;s first address the approach to take when answering this question. As is the case when answering most Finance interview questions, you want to <strong>keep your answer very high-level<\/strong> at first. You can use the <strong>5 Step Framework<\/strong> we provide below to help keep you on track.<\/p>\n\n\n\n<p>This avoids two common mistakes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Mistake #1: Seeming Long-Winded <\/strong>\u2013 If you give a long answer to the question it can seem like you don&#8217;t understand the concept and\/or can\u2019t give a succinct answer. Neither of those things reflects well on a prospective candidate.<\/li>\n\n\n\n<li><strong>Mistake #2: Trying to Show off Your Knowledge<\/strong> \u2013 Let\u2019s face it, the person sitting on the other side of the table in an interview has a huge leg up on you in most cases. They have likely been on the job for years and can run circles around you. If you try to show off how much you know, they will just take it to the next level. It\u2019s nearly impossible to win this game.<\/li>\n<\/ul>\n\n\n\n<p>By keeping it simple at the start, you can <strong>avoid these common mistakes<\/strong>. With that out of the way, let\u2019s dive in here!<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-1024x576.jpg\" alt=\"A balanced scale showing candidates must weigh showing they 'Get It' vs saying too much\" class=\"wp-image-39657\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-1024x576.jpg 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-300x169.jpg 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-768x432.jpg 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-400x225.jpg 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-624x351.jpg 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-50x28.jpg 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1-100x56.jpg 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/2-The-Balancing-Act-1.jpg 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-quick-note-levered-vs-unlevered-dcf\"><strong>Quick Note: Levered vs Unlevered DCF<\/strong><\/h2>\n\n\n\n<p>When an interviewer asks you to walk through a <strong>DCF<\/strong> <strong>Valuation<\/strong>, they could be asking for one of two approaches. The two approaches are <strong>Unlevered DCF (excludes Debt impact)<\/strong> or a <strong>Levered DCF (includes Debt impact)<\/strong>. <\/p>\n\n\n\n<p>On the job, the <strong><u>vast majority<\/u><\/strong> of <strong>Discounted Cash Flow<\/strong> analyses are <strong>Unlevered DCFs<\/strong>. As a result, the framework below focuses on just the <strong>Unlevered DCF<\/strong> approach.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-in-5-steps\"><strong>&#8216;Walk Me Through a DCF&#8217; in 5 Steps<\/strong><\/h2>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-af21a01c\"><\/div>\n\n\n<!-- This site is converting visitors into subscribers and customers with OptinMonster - https:\/\/optinmonster.com :: Campaign Title: Interview Question Obfuscation - 5 Steps -->\n<div id=\"om-zumzf59qjsiy3x4pe4ub-holder\"><\/div>\n<script>(function(d,u,ac){var s=d.createElement('script');s.type='text\/javascript';s.src='https:\/\/a.omappapi.com\/app\/js\/api.min.js';s.async=true;s.dataset.user=u;s.dataset.campaign=ac;d.getElementsByTagName('head')[0].appendChild(s);})(document,130718,'zumzf59qjsiy3x4pe4ub');<\/script>\n<!-- \/ OptinMonster -->\n\n\n\n<p>With that clarified, let\u2019s now look at our <strong>5 Step Framework<\/strong>. <\/p>\n\n\n\n<p>To answer this question most effectively, you can break a <strong>Discounted Cash Flow<\/strong> analysis down into 5 easy Steps.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-1024x576.jpg\" alt=\"An image showing the text for the 5 steps for Walk Me Through a DCF\" class=\"wp-image-39709\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-1024x576.jpg 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-300x169.jpg 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-768x432.jpg 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-400x225.jpg 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-624x351.jpg 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-50x28.jpg 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3-100x56.jpg 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/1a-Walk-Me-Through-a-DCF-in-5-Steps-3.jpg 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div class=\"schema-how-to wp-block-yoast-how-to-block\"><p class=\"schema-how-to-description\"><strong>How to Answer &#8216;Walk Me Through a DCF&#8217; in 5 Steps<\/strong><\/p> <ol class=\"schema-how-to-steps\"><li class=\"schema-how-to-step\" id=\"how-to-step-1624726535152\"><strong class=\"schema-how-to-step-name\">Project Future Cash Flows<\/strong> <p class=\"schema-how-to-step-text\">Make detailed financial projections (usually for 5-10) years until the Business reaches maturity (i.e. GDP-level growth).<\/p> <\/li><li class=\"schema-how-to-step\" id=\"how-to-step-1624726569553\"><strong class=\"schema-how-to-step-name\">Calculate Terminal Value<\/strong> <p class=\"schema-how-to-step-text\">Use either the Perpetuity Growth or Exit Multiple method to calculate Terminal Value.<\/p> <\/li><li class=\"schema-how-to-step\" id=\"how-to-step-1624726581208\"><strong class=\"schema-how-to-step-name\">Discount Projected Cash Flows and Terminal Value at WACC<\/strong> <p class=\"schema-how-to-step-text\">Discount your Projected Cash Flows and Terminal Value at the Weighted Average Cost of Capital (WACC) to arrive at Enterprise Value.<\/p> <\/li><li class=\"schema-how-to-step\" id=\"how-to-step-1624726601355\"><strong class=\"schema-how-to-step-name\">Work from Enterprise Value to Equity Value<\/strong> <p class=\"schema-how-to-step-text\">Subtract Debt and add Cash to arrive at the value attributable to the owners of the business (i.e. Equity Value).<\/p> <\/li><li class=\"schema-how-to-step\" id=\"how-to-step-1624726615179\"><strong class=\"schema-how-to-step-name\">Calculate Price Per Share <\/strong> <p class=\"schema-how-to-step-text\">Divide the Equity Value by the Company&#8217;s total Share Count to arrive at Price Per Share. <\/p> <\/li><\/ol><\/div>\n\n\n\n<p><strong>In the sections below<\/strong>, we\u2019ll walk through <strong>each of these steps<\/strong> in <strong>extensive detail<\/strong>. We&#8217;ll <strong>also explain<\/strong> the <strong>underlying idea<\/strong> behind each step.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-step-1-project-future-cash-flows\"><strong>&#8216;Walk Me Through a DCF&#8217; Step #1: Project Future Cash Flows<\/strong><\/h2>\n\n\n\n<p>We first create <strong>explicit projections<\/strong> to compute the Business&#8217; <strong>Cash Flows<\/strong> until the Business hits a <strong><em>\u2018steady-state\u2019<\/em> growth rate<\/strong>. <strong>Steady-state growth typically occurs 5-10 years<\/strong> into the future. This period of projections is referred to as <strong><em>\u2018Stage 1\u2019<\/em><\/strong> of the <strong>DCF<\/strong> analysis.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-calculating-unlevered-free-cash-flow\"><strong>Calculating Unlevered Free Cash Flow<\/strong><\/h3>\n\n\n\n<p>Because this is an <strong>Unlevered DCF<\/strong> analysis, we ignore the impact of the <strong>Capital Structure<\/strong> (i.e. the level of <strong>Debt<\/strong>). As such, we do <strong><u>not<\/u><\/strong> incorporate deductions for <strong>Interest Expense<\/strong> or <strong>Principal<\/strong> payments for <strong>Debt<\/strong> in our <strong>Cash Flow<\/strong> calculations.<\/p>\n\n\n\n<p>More specifically, we are calculating the <strong>Business&#8217; Cash<\/strong> <strong>Flow <\/strong>including the impact of <strong>Taxes<\/strong>, <strong>Capital Expenditures<\/strong>, and <strong>Working Capital<\/strong>. <\/p>\n\n\n\n<p>The formal name for this type of <strong>Cash Flow<\/strong> is <strong>Unlevered Free Cash Flow<\/strong> (or <strong>UFCF<\/strong>). Again, it&#8217;s <strong>&#8216;Unlevered&#8217; <\/strong>because we don&#8217;t take into account the impact of <strong>Debt <\/strong>(a.k.a. <strong>Leverage<\/strong>). In the diagram below, we illustrate the calculation step-by-step in <strong>Plain English<\/strong>:<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/3-Unlevered-Free-Cash-Flow-2.gif\" alt=\"A GIF illustrating the 5 Steps to Calculate Unlevered Free Cash Flow\" class=\"wp-image-39711\"\/><\/figure>\n\n\n\n<p>The <strong>goal with the calculations<\/strong> above is to <strong>continue these projections<\/strong> <strong>until<\/strong> the business hits a <strong>\u2018Steady State\u2019<\/strong> level of growth in line with the overall economy (i.e. GDP Growth).<\/p>\n\n\n\n<p><strong>Two quick notes here. <\/strong><\/p>\n\n\n\n<p>First, <strong>EBIT <\/strong>includes a <strong>deduction for Depreciation and Amortization <\/strong>(D&amp;A). We deduct <strong>D&amp;A<\/strong> because it <strong>lowers our taxes<\/strong>. <\/p>\n\n\n\n<p>Finance professionals describe this dynamic as the <strong>&#8216;Depreciation Tax Shield,&#8217;<\/strong> which is a <strong>common <\/strong><a href=\"https:\/\/finance-able.com\/investment-banking-interview-questions\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Interview Question<\/mark><\/strong><\/a><strong> topic<\/strong>. For a<strong> deeper dive<\/strong> check out our article on the <a href=\"https:\/\/finance-able.com\/depreciation-tax-shield\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Depreciation Tax Shield<\/mark><\/strong><\/a>. <\/p>\n\n\n\n<p><em>Second, for a <strong>walkthrough of Levered Free Cash Flow<\/strong>, check out our <strong><a href=\"https:\/\/finance-able.com\/paper-lbo\/\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">Paper LBO<\/span><\/a> deep-dive guide<\/strong>.<\/em><\/p>\n\n\n\n<p>Now, let\u2019s move on to <strong>Step 2<\/strong>.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-db4b1242\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide\"\/>\n\n\n\n<p class=\"has-text-align-center has-medium-font-size\"><strong>Need to master DCF for Interviews (or the Job)? <\/strong><\/p>\n\n\n\n<p class=\"has-text-align-center has-medium-font-size\"><strong>Check our Valuation Fundamentals Course<\/strong><\/p>\n\n\n<div class=\"kb-row-layout-wrap kb-row-layout-id39613_d4801c-44 alignnone wp-block-kadence-rowlayout\"><div class=\"kt-row-column-wrap kt-has-2-columns kt-row-layout-equal kt-tab-layout-inherit kt-mobile-layout-row kt-row-valign-top\">\n\n<div class=\"wp-block-kadence-column kadence-column39613_33710d-c6 inner-column-1\"><div class=\"kt-inside-inner-col\">\n<div class=\"wp-block-kadence-advancedbtn kb-buttons-wrap kb-btns39613_614218-45\"><a class=\"kb-button kt-button button kb-btn39613_138adf-4b kt-btn-size-large kt-btn-width-type-auto kb-btn-global-fill  kt-btn-has-text-true kt-btn-has-svg-false  wp-block-kadence-singlebtn\" href=\"https:\/\/courses.finance-able.com\/courses\/valuation-fundamentals-mastery\"><span class=\"kt-btn-inner-text\">Valuation course<\/span><\/a><\/div>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-kadence-column kadence-column39613_86e11f-9e inner-column-2\"><div class=\"kt-inside-inner-col\">\n<div class=\"wp-block-kadence-advancedbtn kb-buttons-wrap kb-btns39613_954791-89\"><a class=\"kb-button kt-button button kb-btn39613_e8dc7c-f3 kt-btn-size-large kt-btn-width-type-auto kb-btn-global-fill  kt-btn-has-text-true kt-btn-has-svg-false  wp-block-kadence-singlebtn\" href=\"https:\/\/courses.finance-able.com\/\"><span class=\"kt-btn-inner-text\">All courses<\/span><\/a><\/div>\n<\/div><\/div>\n\n<\/div><\/div>\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide\"\/>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-90a12b08\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-step-2-calculate-terminal-value\"><strong>Walk Me Through a DCF Step #2: Calculate Terminal Value<\/strong><\/h2>\n\n\n\n<p>In Step 2, we will calculate all of the value that exists <strong><u>beyond<\/u><\/strong> the <strong>Stage 1<\/strong> <strong>Cash Flows<\/strong>. <\/p>\n\n\n\n<p>We refer to the phase beyond <strong>Stage 1<\/strong> as <strong>Stage 2<\/strong>. And we call the <em><strong>value<\/strong><\/em> that exists in <strong>Stage 2<\/strong> our <strong>Terminal Value<\/strong>.<\/p>\n\n\n\n<p>Practitioners use two common methods to calculate <strong>Terminal Value<\/strong>: The <strong>Perpetuity Growth Method<\/strong> and The <strong>Exit Multiple Method<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/4-Terminal-Value.gif\" alt=\"A GIF showing the calculation of Terminal Value, which is Step 2 of Walk Me Through a DCF\" class=\"wp-image-39659\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-terminal-value-calculation-method-1-perpetuity-growth-method\"><strong>Terminal Value Calculation Method #1 \u2013 Perpetuity Growth Method<\/strong><\/h3>\n\n\n\n<p>If we wanted to value the <strong>Cash Flows<\/strong> that exist beyond <strong>Stage 1<\/strong>, we could make <strong>100 years of projections<\/strong>\u2026but that would be a <strong><span style=\"text-decoration: underline;\">TON<\/span><\/strong> of work.<\/p>\n\n\n\n<p>Fortunately, we have a well-established formula to help. The <strong>Perpetuity Growth Formula<\/strong> takes our final year of <strong>Cash Flow<\/strong> from <strong>Stage 1<\/strong>, projects out all future <strong>Cash Flows <\/strong>(<strong>beyond Stage 1<\/strong>) at a <strong>constant growth rate (to infinity)<\/strong>, and then <strong>Discounts those Cash Flows<\/strong> back to the <strong><u>final period<\/u><\/strong> of <strong>Stage 1<\/strong>.<\/p>\n\n\n\n<p>The formula, which we\u2019ve illustrated below, is called the <strong>Perpetuity Growth<\/strong> <strong>Formula<\/strong>. For more on the math behind this formula, check out this <strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/Geometric_series\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">link<\/span><\/a><\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/7-Perpetuity-Growth-Formula-Animated.gif\" alt=\"A GIF showing the Perpetuity Growth Formula\" class=\"wp-image-39686\"\/><\/figure>\n\n\n\n<p>One thing to note is that the <strong>Long-Term Growth (or \u2018g\u2019)<\/strong> should generally be <strong>in line with GDP growth<\/strong>. Otherwise, the business would outgrow the overall economy\u2026which is probably not a reasonable assumption! <\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-critical-point-terminal-value-enterprise-value-at-the-end-of-stage-1\"><strong>CRITICAL POINT: Terminal Value = Enterprise Value at the end of Stage 1<\/strong><\/h3>\n\n\n\n<p>Before we dive into the second method, there\u2019s a <strong><em><u>critical<\/u><\/em><\/strong> point that\u2019s important to grasp here. <\/p>\n\n\n\n<p>The present value of all the future <strong>Unlevered Free Cash Flows<\/strong> of a business <strong>Discounted<\/strong> back to any point in time, reflects the <strong>Purchase Price<\/strong> (i.e. <strong>Enterprise Value<\/strong>) of the business.<\/p>\n\n\n\n<p>When we calculate <strong>Terminal Value<\/strong> using the <strong>Perpetuity Growth Method<\/strong>, we are simply doing a <strong>DCF<\/strong> of all <strong>Cash Flows<\/strong> beyond <strong>Stage 1<\/strong>. <\/p>\n\n\n\n<p>As a result, you can also think of <strong>Terminal Value<\/strong> as the <strong>Enterprise Value<\/strong> of the business at the end of <strong>Stage 1<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-terminal-value-calculation-method-2-exit-multiple-method\"><strong>Terminal Value Calculation Method #2 \u2013 Exit Multiple Method<\/strong><\/h3>\n\n\n\n<p>Because <strong>Terminal Value<\/strong> represents the <strong>Enterprise Value<\/strong> of the Business at the end of <strong>Stage 1<\/strong>, we can take a shortcut here. To do that, we simply use <strong>Peer Valuation Multiples <\/strong>(typically <strong>EV\/EBITDA<\/strong>) which we multiply by the appropriate <strong>Valuation Metric<\/strong> (in this case <strong>Year 5 <a href=\"https:\/\/finance-able.com\/ebitda\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">EBITDA<\/mark><\/a><\/strong>) to calculate our <strong>Terminal Value<\/strong>.<\/p>\n\n\n\n<p>Now that we\u2019ve calculated our <strong>Stage 1<\/strong> and <strong>Stage 2<\/strong> values for our <strong>Unlevered DCF<\/strong>, we need to pull the <strong><u>future<\/u><\/strong> <strong>Cash Flows<\/strong> back to <strong><u>today<\/u><\/strong> using <strong><a href=\"https:\/\/www.rff.org\/publications\/explainers\/discounting-101\/\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">Discounting<\/span><\/a><\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/6-Exit-Multiple-Method.gif\" alt=\"A GIF showing the calculation of Terminal Value using the Exit Multiple Method\" class=\"wp-image-39663\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-step-3-discount-cash-flows-and-terminal-value-by-wacc\"><strong>Walk Me Through a DCF Step #3: Discount Cash Flows and Terminal Value by WACC<\/strong><\/h2>\n\n\n\n<p>In Step 3, we calculate the <strong>Weighted Average Cost of Capital<\/strong> (or <strong>WACC<\/strong>). <strong>WACC <\/strong>is the <strong>Discount Rate<\/strong> we use to <strong>Discount<\/strong> our <strong>Cash Flows<\/strong> back to today. <\/p>\n\n\n\n<p>The general idea here is to find a <strong>Discount Rat<\/strong>e that <strong>reflects the risk<\/strong> of the <strong>Cash Flows<\/strong> stream being valued.<\/p>\n\n\n\n<p>Once we&#8217;ve calculated <strong>WACC<\/strong>, we&#8217;ll show you how to <strong>calculate Discounted Cash Flow <\/strong>at the end of Step 3.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-s-the-big-idea-behind-wacc\"><strong>What&#8217;s the Big Idea Behind WACC?<\/strong><\/h3>\n\n\n\n<p>The problem is that most businesses have <strong><u>multiple<\/u><\/strong> <strong>capital providers<\/strong> (i.e. <strong>Lenders<\/strong> and <strong>Investors<\/strong>) with different risk profiles. <\/p>\n\n\n\n<p>Their risk profiles differ because <strong>Lenders<\/strong> are typically <strong><u>paid first<\/u><\/strong> in a <strong>Sale<\/strong> or <strong>Bankruptcy<\/strong>. So, <strong>Lenders<\/strong> take <strong><span style=\"text-decoration: underline;\">less risk<\/span><\/strong> than <strong>Investors<\/strong>.  <strong>Investors <\/strong>take a <strong><span style=\"text-decoration: underline;\">higher level of risk<\/span><\/strong> because they are paid only after all the money owed to <strong>Lenders<\/strong> has been repaid.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/7c-Debt-vs-Equity-Repayment-2.gif\" alt=\"Image showing that Lenders and Investors have different risk profiles and thus different expected return requirements.\" class=\"wp-image-39731\"\/><\/figure>\n\n\n\n<p>As a result, <strong>Lenders<\/strong> and <strong>Investors<\/strong> have <strong>different expected rates of return<\/strong>. So, using either of their individual expected rates of return would incorrectly value the Business. <\/p>\n\n\n\n<p>To solve this issue, we take a <strong>\u2018Weighted Average\u2019<\/strong> of their expected returns. This <strong>Weighted Average<\/strong> reflects the <strong>blended average return<\/strong> for <strong><u>all providers of capital<\/u><\/strong> to the company. We call this blended average return the <strong>Weighted Average Cost of Capital.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-wacc-formula-in-plain-english\"><strong>The WACC Formula in Plain English<\/strong><\/h3>\n\n\n\n<p>Below we\u2019ve laid out the formula for the <strong>Weighted Average Cost of Capital<\/strong> and explanations for each component.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/7-WACC-Formula-1.gif\" alt=\"Image showing the formula for the Weighted Average Cost of Capital\" class=\"wp-image-39733\"\/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-weighted-average-cost-of-capital-wacc-components\"><strong>Weighted Average Cost of Capital (WACC) Components<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debt \/ (Debt + Equity)<\/strong> \u2013 the value of Debt (<strong>typically Book Value<\/strong>) relative to the total value of Debt + Equity.<\/li>\n\n\n\n<li><strong>Cost of Debt (Kd)<\/strong> \u2013 the current <strong>blended return<\/strong> expected by <strong>Lenders <\/strong>to the Company. Typically calculated as the weighted average <strong>Yield to Maturity<\/strong> for all components of the Company\u2019s Debt. Note that we look at the <strong>Cost of Debt<\/strong> on an <strong>after-tax basis<\/strong> because <strong>Interest is tax-deductible<\/strong>, which <strong>lowers<\/strong> the true <strong>Cost of Debt<\/strong>.<\/li>\n\n\n\n<li><strong>Equity \/ (Debt + Equity)<\/strong> &#8211; the value of Equity (<strong><u>always<\/u><\/strong> <strong>Market Value<\/strong>) relative to the total value of Debt + Equity.<\/li>\n\n\n\n<li><strong>Cost of Equity (Ke)<\/strong> &#8211; the level of <strong>Return expected by Investors<\/strong> in the Business which is calculated using the <strong>Capital Asset Pricing Model<\/strong> (or <strong>\u2018CAPM\u2019<\/strong>) formula.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-cost-of-equity-formula-or-capm-also-in-plain-english\"><strong>The Cost of Equity Formula (or CAPM)\u2026also in Plain English!<\/strong><\/h3>\n\n\n\n<p>Calculating the <strong>expected return of our Lenders<\/strong> is <strong>fairly simple<\/strong>. We look at the <strong>Interest Rate<\/strong> that they would charge to lend to the company\u2026and that\u2019s basically it.<\/p>\n\n\n\n<p>Determining the expected rate of return required by <strong>Investors<\/strong> is <strong>a bit trickier<\/strong> because it\u2019s not explicitly stated anywhere. Fortunately, there\u2019s a well-established theory called the <strong>Capital Asset Pricing Model (or \u2018CAPM\u2019) <\/strong>to help us. The <strong>CAPM <\/strong>formula helps us to figure out what return Investors will expect.<\/p>\n\n\n\n<p>Below are the components of the formula along with explanations for what each component represents:<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/8-Cost-of-Equity-Formula-2.gif\" alt=\"An Image showing the components of the Capital Asset Pricing Model\" class=\"wp-image-39737\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"cost-of-equity-or-capm-formula-components-bdc1a410-aa3a-47b6-b526-877cc7f8b619\"><strong>Cost of Equity (or CAPM) Formula Components<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Risk-Free Rate (Rf)<\/strong> \u2013 sets a <strong>baseline for the level of return<\/strong> an Investor should expect if they take <strong><span style=\"text-decoration: underline;\">zero<\/span><\/strong> risk. The most common benchmark rate for <strong>Rf<\/strong> is the <strong>10 Year US Treasury Note.<\/strong><\/li>\n\n\n\n<li><a href=\"https:\/\/finance-able.com\/unlevered-beta-formula\/\"><strong>Beta<\/strong><\/a><strong> (\u03b2)<\/strong> \u2013 expresses <strong><em>\u2018Risk\u2019<\/em><\/strong> by showing how a <a href=\"https:\/\/finance-able.com\/the-difference-between-stocks-and-bonds\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Stock<\/mark><\/strong><\/a> moves <strong>relative to the Market<\/strong> <strong>(i.e. how Volatile it is)<\/strong>. A Beta of 1 reflects the average <strong>Risk<\/strong> of the market. As this number increases, it reflects increasing <strong>Risk<\/strong> and thus results in a higher expected return for investors (and vice versa).<\/li>\n\n\n\n<li><strong>Equity\/Market Risk Premium (ERP or MRP)<\/strong> \u2013 shows the <strong><em>\u2018Reward\u2019<\/em><\/strong> Investors have earned in the past for investing in <strong>Stocks (vs Risk-Free Bonds)<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>In short, this formula <strong>begins with a baseline return<\/strong> for a <strong>Risk-Free investment<\/strong>. It then <strong>ratchets up<\/strong> the Return (the <strong><em>Reward<\/em><\/strong> or <strong>ERP\/MRP<\/strong>) expected by <strong>Investors <\/strong>based on the level of <strong><em>Risk<\/em><\/strong> (<strong><em>Beta<\/em><\/strong>) that the <strong>Investor<\/strong> is taking by investing in a particular <strong>Business<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-about-preferred-stock-in-wacc\"><strong>What about Preferred Stock in WACC?<\/strong><\/h3>\n\n\n\n<p>In some instances, you\u2019ll see other components like <strong>Preferred Stock<\/strong> creep into the <strong>WACC<\/strong> formula. This is a common source of confusion for <strong>newcomers<\/strong> <strong>to<\/strong> <strong>Finance<\/strong>.<\/p>\n\n\n\n<p>Remember that at the beginning of this section we said that we have to reflect the <strong>blended average<\/strong> <strong>Expected Returns<\/strong> of <strong><span style=\"text-decoration: underline;\">ALL<\/span> <\/strong>providers of capital to the business? Well, if a company has <strong>Preferred Stock<\/strong> (or any other form of <strong>Debt<\/strong> or <strong>Equity<\/strong>), we have to incorporate that into <strong>our WACC calculation<\/strong> as well<strong>.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-to-discount-cash-flows\"><strong>How to Discount Cash Flows<\/strong><\/h3>\n\n\n\n<p>Once we\u2019ve calculated our <strong>WACC<\/strong>, we then use the <strong>WACC<\/strong> to <strong>Discount <\/strong>our <strong>Stage 1<\/strong> <strong>Cash Flows<\/strong> and <strong>Stage 2<\/strong> (<strong>Terminal Value<\/strong>) back to today.<\/p>\n\n\n\n<p>In substance, the sum of all of our <strong>Discounted Cash Flows <\/strong>represents the price we would pay for the right to those future <strong>Cash Flows<\/strong>, or the <strong>Purchase Price<\/strong> to buy the entire business which we call <strong>Enterprise Value<\/strong>. <\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/9-DCF-Process-1.gif\" alt=\"A GIF Showing the Cash Flows of a business being Discounted by WACC to arrive at Enterprise Value\" class=\"wp-image-39750\"\/><\/figure>\n\n\n\n<p>In Step 4, we\u2019ll work from (<strong>Enterprise Value<\/strong>) to the value attributable only to the <strong>Business<\/strong> <strong>Owners<\/strong> (<strong>Equity Value<\/strong>).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-step-4-from-enterprise-value-to-equity-value\"><strong>&#8216;Walk Me Through a DCF&#8217; Step #4: From Enterprise Value to Equity Value<\/strong><\/h2>\n\n\n\n<p>To calculate <strong>Equity Value<\/strong>, we need to incorporate both <strong>Debt<\/strong> and <strong>Cash<\/strong>.<\/p>\n\n\n\n<p>Let\u2019s begin with <strong>Debt<\/strong>. Most businesses are funded with some level of <strong>Debt<\/strong>. And if the Business were ever sold, the <strong>Lenders<\/strong> need to be <strong>repaid before the Owners<\/strong> can collect any proceeds. As a result, we have to <strong><span style=\"text-decoration: underline;\">subtract Debt<\/span><\/strong> to get to the value attributable to the owners of the Business. &nbsp;<\/p>\n\n\n\n<p>In addition, most Businesses will <strong>generate Excess Cash<\/strong> that accumulates in the company bank account over time. If an Owner sells their Business, they will typically <strong>keep the Excess Cash<\/strong>. As such, we <strong><span style=\"text-decoration: underline;\">add Excess Cash<\/span><\/strong> to reflect the fact that the <strong>Cash belongs to the Owner of the Business<\/strong>.<\/p>\n\n\n\n<p>So, in short: <strong>Equity Value = Enterprise Value \u2013 Debt + Cash<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/10-Enterprise-Value-to-Equity-Value-1.gif\" alt=\"GIF showing how to Calculate from Enterprise Value to Equity Value, which is Step 4 of Walk Me Through a DCF\" class=\"wp-image-39755\"\/><\/figure>\n\n\n\n<p>After these completing these calculations, we arrive at the <strong><u>total<\/u><\/strong> value to the <strong>Owners (i.e. <\/strong>S<strong>hareholders)<\/strong> of a <strong>Business<\/strong>. But we\u2019re not quite done though.<\/p>\n\n\n\n<p>Most Businesses slice their <strong>Equity Value<\/strong> into numerous <strong>Shares<\/strong> so they can have a large number of <strong>Owners<\/strong>. In the next step, we\u2019ll walk through how to calculate the value attributable to a single <strong>Share<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-walk-me-through-a-dcf-step-5-calculating-price-per-share\"><strong>&#8216;Walk Me Through a DCF&#8217; Step #5: Calculating Price Per Share<\/strong><\/h2>\n\n\n\n<p>As discussed in our <a href=\"https:\/\/youtu.be\/d_whtPnvqKM\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Stocks vs Bonds<\/span><\/strong><\/a><strong> explainer video<\/strong>, most businesses divide their ownership into many <strong>Shares<\/strong>. So, our final step is to calculate the value attributable to an <strong>individual Share<\/strong>.<\/p>\n\n\n\n<p>Before we begin, note that we listed this last step as <strong>optional<\/strong>. In many cases, you can just calculate to <strong>Equity Value<\/strong> and stop. But sometimes the Interviewer might want you to work to <strong>Price Per Share<\/strong> in which case you can use this explanation.<\/p>\n\n\n\n<p>To calculate the <strong>Price Per Share<\/strong>, we need to divide the <strong>Equity Value<\/strong> by the <strong>Number of Shares<\/strong> issued by the company. The problem is that companies have <strong><span style=\"text-decoration: underline;\">two<\/span> <\/strong>distinct share counts:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Basic Shares<\/strong> \u2013 reflects the number of <strong>Shares<\/strong> that are <strong>currently Outstanding<\/strong>.<\/li>\n\n\n\n<li><strong>Fully Diluted Shares<\/strong> \u2013 current shares <strong>plus all potential Shares<\/strong> from employee <strong>Stock <\/strong>O<strong>ption exercises<\/strong>, <strong>Restricted Stock<\/strong>, and any securities that are <strong>Convertible<\/strong> into additional shares. We calculate the number of potential shares with the <a href=\"https:\/\/finance-able.com\/treasury-stock-method\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Treasury Stock Method<\/span><\/strong><\/a> .<\/li>\n<\/ul>\n\n\n\n<p>In short, we divide <strong>Equity Value<\/strong> by the <strong>Fully Diluted Share<\/strong> <strong>Count<\/strong> of the Business. This wraps up our fifth and last step in the DCF process.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1080\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/11-Equity-Value-to-Price-Per-Share-1.gif\" alt=\"GIF showing how to calculate Price Per Share, which is Step 5 of Walk Me Through a DCF\" class=\"wp-image-39766\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-wrap-up\"><strong>Wrap-Up<\/strong><\/h2>\n\n\n\n<p>Having a <strong>solid answer<\/strong> to <strong>&#8216;Walk Me Through a DCF&#8217;<\/strong> is a <strong>core <\/strong>part of prepping for <strong>Technical Interview Questions<\/strong> for <strong>Investment Banking<\/strong>, <strong>Private Equity<\/strong> or <strong>Investment Management<\/strong>.<\/p>\n\n\n\n<p>Hopefully, after reading through this, you have a much better understanding of both the <strong>5 Step approach<\/strong> <strong><span style=\"text-decoration: underline;\">AND<\/span><\/strong> the <strong>underlying ideas<\/strong> behind the Question, &#8216;<strong>Walk Me Through a DCF&#8217;.<\/strong> <\/p>\n\n\n\n<p>If you follow the approach laid out above and truly grasp the underlying concepts behind each step, you\u2019ll be in great shape!<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-1024x576.png\" alt=\"An image showing an interviewer satisfied with the answer to \u2018Walk Me Through a DCF\u2019, from an interviewee\" class=\"wp-image-39644\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-1536x864.png 1536w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/Z-Happy-Interviewee.png 1920w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Let us know if you have any comments or questions below.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-interview-question-video-walk-me-through-a-dcf\"><strong>Interview Question Video: Walk Me Through a DCF<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If you\u2019d like a video overview of this topic, check out our <strong><a href=\"https:\/\/youtu.be\/wSjk7j9rN_M\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">Walk Me Through a DCF<\/span><\/a><\/strong> video from our Founder, <a href=\"https:\/\/finance-able.com\/about-us\/\"><span class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>Mike Kimpel<\/strong><\/span><\/a>, with a full walkthrough of how to answer the question.<\/li>\n\n\n\n<li>Also check out our <a href=\"https:\/\/www.youtube.com\/c\/FinanceableTraining\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">YouTube channel<\/span><\/strong><\/a><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\"> <\/span><\/strong>here for more interview question reviews for common questions like: <a href=\"https:\/\/youtu.be\/zKEKNZy-4cs\"><span class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>Walk Me Through an LBO<\/strong><\/span><\/a>, <a href=\"https:\/\/youtu.be\/9DHi3Ef9S2k\"><span class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>How does $10 of Depreciation Flow Through the 3 Statements<\/strong><\/span><\/a>, and <a href=\"https:\/\/youtu.be\/bRn-vu0wRJ8\"><span class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>When to use EV\/Revenue Multiples<\/strong><\/span><\/a>.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:24px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-9821cc03\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1629302555427\"><strong class=\"schema-faq-question\"><em>How to calculate Discounted Cash Flow?<\/em><\/strong> <p class=\"schema-faq-answer\">The 5 steps to the Discounted Cash Flow process are: <br\/>1) Project Future Cash Flows.<br\/>2) Calculate Terminal Value.<br\/>3) Discount Cash Flows and Terminal Value by the Weighted Average Cost of Capital (or WACC).<br\/>4) Work from Enterprise Value to Equity Value.<br\/>5) Calculate Price Per Share.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1629302649074\"><strong class=\"schema-faq-question\"><em>What is DCF?<\/em><\/strong> <p class=\"schema-faq-answer\">DCF stands for &#8216;Discounted Cash Flow.&#8217; In a DCF analysis, you value a Business based on its estimated future Cash Flows, which are discounted to reflect the Time Value of Money. <\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1629302970554\"><strong class=\"schema-faq-question\"><em>What is a DCF in Investment Banking?<\/em><\/strong> <p class=\"schema-faq-answer\">Discounted Cash Flow Analysis (or DCF) is a core valuation method in Investment Banking. With a DCF, you discount the future values of a business to arrive at its Intrinsic Value. This Intrinsic approach is then weighed against other market-oriented approaches like Trading and Transaction comparables. <\/p> <\/div> <\/div>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer advgb-dyn-90a12b08\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-related-links\"><strong>Related Links<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-yoast-seo-related-links yoast-seo-related-links\">\n<li><a href=\"https:\/\/finance-able.com\/private-equity-vs-venture-capital\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Private Equity vs Venture Capital \u2013 The Ultimate Guide (2021 Update)<\/span><\/strong><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/finance-able.com\/walk-me-through-an-lbo\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Walk Me Through an LBO in 6 Steps \u2013 The Ultimate Guide (2021)<\/span><\/strong><\/a><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/finance-able.com\/how-to-value-a-business-made-simple\/\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">Learn Finance ASAP #2 &#8211; How to Value a Business&#8230;Made Simple<\/span><\/a><\/strong><\/li>\n<\/ul>\n<style class=\"advgb-styles-renderer\">.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-wrap{margin-top:42px;margin-right:42px;margin-bottom:42px;margin-left:42px;padding-top:10px;padding-right:10px;padding-bottom:10px;padding-left:10px;background-color:#f4f4f4;border-top:3px solid currentColor;border-right:3px solid currentColor;border-bottom:3px solid currentColor;border-left:3px solid currentColor;border-top-left-radius:20px;border-top-right-radius:20px;border-bottom-right-radius:20px;border-bottom-left-radius:20px;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-contents-title-wrap{padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-contents-title{font-size:25px;line-height:46px;letter-spacing:0.6px;font-family:'Nunito Sans';font-weight:700;font-style:normal;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-wrap .kb-table-of-content-list{color:#0693e3;font-size:20.5px;line-height:35px;letter-spacing:0px;font-family:'Nunito Sans';font-weight:600;font-style:normal;text-transform:capitalize;margin-top:20px;margin-right:0px;margin-bottom:0px;margin-left:0px;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-list li{margin-bottom:11px;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-list li .kb-table-of-contents-list-sub{margin-top:11px;}.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:before{background-color:#f4f4f4;}@media all and (max-width: 1024px){.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-wrap{border-top:3px solid currentColor;border-right:3px solid currentColor;border-bottom:3px solid currentColor;border-left:3px solid currentColor;}}@media all and (max-width: 767px){.kb-table-of-content-nav.kb-table-of-content-id_fabc14-6f .kb-table-of-content-wrap{border-top:3px solid currentColor;border-right:3px solid currentColor;border-bottom:3px solid currentColor;border-left:3px solid currentColor;}}.kb-row-layout-id39613_d4801c-44 > .kt-row-column-wrap{align-content:start;}:where(.kb-row-layout-id39613_d4801c-44 > .kt-row-column-wrap) > .wp-block-kadence-column{justify-content:start;}.kb-row-layout-id39613_d4801c-44 > .kt-row-column-wrap{column-gap:var(--global-kb-gap-md, 2rem);row-gap:var(--global-kb-gap-md, 2rem);padding-top:0px;padding-bottom:21px;grid-template-columns:minmax(0, calc(50% - ((var(--global-kb-gap-md, 2rem) * 1 )\/2)))minmax(0, calc(50% - ((var(--global-kb-gap-md, 2rem) * 1 )\/2)));}.kb-row-layout-id39613_d4801c-44 > .kt-row-layout-overlay{opacity:0.30;}@media all and (max-width: 1024px){.kb-row-layout-id39613_d4801c-44 > .kt-row-column-wrap{grid-template-columns:repeat(2, minmax(0, 1fr));}}@media all and (max-width: 767px){.kb-row-layout-id39613_d4801c-44 > .kt-row-column-wrap{grid-template-columns:minmax(0, 1fr);}}.kadence-column39613_33710d-c6 > .kt-inside-inner-col,.kadence-column39613_33710d-c6 > .kt-inside-inner-col:before{border-top-left-radius:0px;border-top-right-radius:0px;border-bottom-right-radius:0px;border-bottom-left-radius:0px;}.kadence-column39613_33710d-c6 > .kt-inside-inner-col{column-gap:var(--global-kb-gap-sm, 1rem);}.kadence-column39613_33710d-c6 > .kt-inside-inner-col{flex-direction:column;}.kadence-column39613_33710d-c6 > .kt-inside-inner-col > .aligncenter{width:100%;}.kadence-column39613_33710d-c6 > .kt-inside-inner-col:before{opacity:0.3;}.kadence-column39613_33710d-c6{position:relative;}@media all and (max-width: 1024px){.kadence-column39613_33710d-c6 > .kt-inside-inner-col{flex-direction:column;justify-content:center;}}@media all and (max-width: 767px){.kadence-column39613_33710d-c6 > .kt-inside-inner-col{flex-direction:column;justify-content:center;}}.wp-block-kadence-advancedbtn.kt-btns39613_614218-45, .site .entry-content .wp-block-kadence-advancedbtn.kt-btns39613_614218-45, .wp-block-kadence-advancedbtn.kb-btns39613_614218-45, .site .entry-content .wp-block-kadence-advancedbtn.kb-btns39613_614218-45{margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;}.wp-block-kadence-advancedbtn.kb-btns39613_614218-45{gap:var(--global-kb-gap-xs, 0.5rem );justify-content:center;align-items:center;}.kt-btns39613_614218-45 .kt-button{font-weight:normal;font-style:normal;}ul.menu .wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button{width:initial;}.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button{color:#ffffff;background:#eb7d21;font-size:19px;border-top-left-radius:28px;border-top-right-radius:28px;border-bottom-right-radius:28px;border-bottom-left-radius:28px;border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;}.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:focus{color:#ffffff;background:#ff8d00;border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}@media all and (max-width: 1024px){.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button{border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;}}@media all and (max-width: 1024px){.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:focus{border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}}@media all and (max-width: 767px){.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button{border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;margin-bottom:20px;}.wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_138adf-4b.kb-button:focus{border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}}.kadence-column39613_86e11f-9e > .kt-inside-inner-col,.kadence-column39613_86e11f-9e > .kt-inside-inner-col:before{border-top-left-radius:0px;border-top-right-radius:0px;border-bottom-right-radius:0px;border-bottom-left-radius:0px;}.kadence-column39613_86e11f-9e > .kt-inside-inner-col{column-gap:var(--global-kb-gap-sm, 1rem);}.kadence-column39613_86e11f-9e > .kt-inside-inner-col{flex-direction:column;}.kadence-column39613_86e11f-9e > .kt-inside-inner-col > .aligncenter{width:100%;}.kadence-column39613_86e11f-9e > .kt-inside-inner-col:before{opacity:0.3;}.kadence-column39613_86e11f-9e{position:relative;}@media all and (max-width: 1024px){.kadence-column39613_86e11f-9e > .kt-inside-inner-col{flex-direction:column;justify-content:center;}}@media all and (max-width: 767px){.kadence-column39613_86e11f-9e > .kt-inside-inner-col{flex-direction:column;justify-content:center;}}.wp-block-kadence-advancedbtn.kt-btns39613_954791-89, .site .entry-content .wp-block-kadence-advancedbtn.kt-btns39613_954791-89, .wp-block-kadence-advancedbtn.kb-btns39613_954791-89, .site .entry-content .wp-block-kadence-advancedbtn.kb-btns39613_954791-89{margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;}.wp-block-kadence-advancedbtn.kb-btns39613_954791-89{gap:var(--global-kb-gap-xs, 0.5rem );justify-content:center;align-items:center;}.kt-btns39613_954791-89 .kt-button{font-weight:normal;font-style:normal;}ul.menu .wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button{width:initial;}.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button{color:#ffffff;background:#eb7d21;font-size:19px;border-top-left-radius:28px;border-top-right-radius:28px;border-bottom-right-radius:28px;border-bottom-left-radius:28px;border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;}.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:focus{color:#ffffff;background:#ff8d00;border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}@media all and (max-width: 1024px){.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button{border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;}}@media all and (max-width: 1024px){.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:focus{border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}}@media all and (max-width: 767px){.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button{border-top:0px solid #555555;border-right:0px solid #555555;border-bottom:0px solid #555555;border-left:0px solid #555555;margin-bottom:20px;}.wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:hover, .wp-block-kadence-advancedbtn .kb-btn39613_e8dc7c-f3.kb-button:focus{border-top-color:#444444;border-top-style:solid;border-right-color:#444444;border-right-style:solid;border-bottom-color:#444444;border-bottom-style:solid;border-left-color:#444444;border-left-style:solid;}}<\/style>",
    "protected": false
  },
  "excerpt": {
    "rendered": "<p>Learn how to answer &#8216;Walk Me Through a DCF&#8217; like a Pro with our proven, 5-step framework<\/p>\n",
    "protected": false
  },
  "author": 1,
  "featured_media": 40655,
  "comment_status": "open",
  "ping_status": "open",
  "sticky": false,
  "template": "",
  "format": "standard",
  "meta": {
    "_acf_changed": false,
    "om_disable_all_campaigns": false,
    "advgb_blocks_editor_width": "",
    "advgb_blocks_columns_visual_guide": "",
    "_kad_blocks_custom_css": "",
    "_kad_blocks_head_custom_js": "",
    "_kad_blocks_body_custom_js": "",
    "_kad_blocks_footer_custom_js": "",
    "_kadence_starter_templates_imported_post": false,
    "_kad_post_transparent": "",
    "_kad_post_title": "",
    "_kad_post_layout": "",
    "_kad_post_sidebar_id": "",
    "_kad_post_content_style": "",
    "_kad_post_vertical_padding": "",
    "_kad_post_feature": "",
    "_kad_post_feature_position": "",
    "_kad_post_header": false,
    "_kad_post_footer": false,
    "_kad_post_classname": "",
    "footnotes": "",
    "gopublish_seo_title": "",
    "gopublish_seo_description": ""
  },
  "categories": [122],
  "tags": [123, 121, 124],
  "class_list": [
    "post-39613",
    "post",
    "type-post",
    "status-publish",
    "format-standard",
    "has-post-thumbnail",
    "hentry",
    "category-common-interview-question",
    "tag-common-interview-questions",
    "tag-discounted-cash-flow-analysis",
    "tag-valuation"
  ],
  "acf": [],
  "yoast_head": "<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Walk Me Through a DCF in 5 Steps - The Ultimate Guide (2023)<\/title>\n<meta name=\"description\" content=\"Looking for a Plain English overview to help you nail &#039;Walk Me Through a DCF&#039; for an Interview? Check out our proven 5-Step Framework.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Walk Me Through a DCF in 5 Steps - The Ultimate Guide\" \/>\n<meta property=\"og:description\" content=\"A Plain-English, 5-Step Framework to help you nail your Interview!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\" \/>\n<meta property=\"og:site_name\" content=\"Financeable Training\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/financeable1\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-08T16:50:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-12-21T21:50:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"325\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Mike Kimpel\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:description\" content=\"A Plain-English, 5-Step Framework to help you nail your Interview!\" \/>\n<meta name=\"twitter:creator\" content=\"@financeable1\" \/>\n<meta name=\"twitter:site\" content=\"@financeable1\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mike Kimpel\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"17 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\"},\"author\":{\"name\":\"Mike Kimpel\",\"@id\":\"https:\/\/finance-able.com\/#\/schema\/person\/967da5e27f2e418ee5fcdfb407259ebc\"},\"headline\":\"Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide\",\"datePublished\":\"2023-01-08T16:50:00+00:00\",\"dateModified\":\"2025-12-21T21:50:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\"},\"wordCount\":3038,\"commentCount\":1,\"publisher\":{\"@id\":\"https:\/\/finance-able.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\",\"keywords\":[\"Common Interview Questions\",\"Discounted Cash Flow Analysis\",\"Valuation\"],\"articleSection\":[\"Common Interview Questions\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#respond\"]}]},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\",\"name\":\"Walk Me Through a DCF in 5 Steps - The Ultimate Guide (2023)\",\"isPartOf\":{\"@id\":\"https:\/\/finance-able.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\",\"datePublished\":\"2023-01-08T16:50:00+00:00\",\"dateModified\":\"2025-12-21T21:50:27+00:00\",\"description\":\"Looking for a Plain English overview to help you nail 'Walk Me Through a DCF' for an Interview? Check out our proven 5-Step Framework.\",\"breadcrumb\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#breadcrumb\"},\"mainEntity\":[{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427\"},{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074\"},{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554\"}],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage\",\"url\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\",\"contentUrl\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\",\"width\":720,\"height\":325,\"caption\":\": A stick figure answering an interview question with the title text 'Walk Me Through an LBO' below\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/finance-able.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/finance-able.com\/#website\",\"url\":\"https:\/\/finance-able.com\/\",\"name\":\"Financeable Training\",\"description\":\"Approachable, Intuitive Finance Training\",\"publisher\":{\"@id\":\"https:\/\/finance-able.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/finance-able.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/finance-able.com\/#organization\",\"name\":\"Financeable Training\",\"url\":\"https:\/\/finance-able.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/finance-able.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/07\/Financeable-Icon-For-Google-Large.png\",\"contentUrl\":\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/07\/Financeable-Icon-For-Google-Large.png\",\"width\":528,\"height\":528,\"caption\":\"Financeable Training\"},\"image\":{\"@id\":\"https:\/\/finance-able.com\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/financeable1\",\"https:\/\/x.com\/financeable1\",\"https:\/\/www.linkedin.com\/company\/finance-able\",\"https:\/\/www.youtube.com\/c\/FinanceableTraining\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/finance-able.com\/#\/schema\/person\/967da5e27f2e418ee5fcdfb407259ebc\",\"name\":\"Mike Kimpel\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g\",\"caption\":\"Mike Kimpel\"},\"sameAs\":[\"http:\/\/finance-able.com\/\"],\"url\":\"https:\/\/finance-able.com\/author\/admin\/\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427\",\"position\":1,\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427\",\"name\":\"How to calculate Discounted Cash Flow?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The 5 steps to the Discounted Cash Flow process are: <br\/>1) Project Future Cash Flows.<br\/>2) Calculate Terminal Value.<br\/>3) Discount Cash Flows and Terminal Value by the Weighted Average Cost of Capital (or WACC).<br\/>4) Work from Enterprise Value to Equity Value.<br\/>5) Calculate Price Per Share.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074\",\"position\":2,\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074\",\"name\":\"What is DCF?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"DCF stands for 'Discounted Cash Flow.' In a DCF analysis, you value a Business based on its estimated future Cash Flows, which are discounted to reflect the Time Value of Money. \",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554\",\"position\":3,\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554\",\"name\":\"What is a DCF in Investment Banking?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Discounted Cash Flow Analysis (or DCF) is a core valuation method in Investment Banking. With a DCF, you discount the future values of a business to arrive at its Intrinsic Value. This Intrinsic approach is then weighed against other market-oriented approaches like Trading and Transaction comparables. \",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"HowTo\",\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#howto-1\",\"name\":\"Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#article\"},\"description\":\"<strong>How to Answer 'Walk Me Through a DCF' in 5 Steps<\/strong>\",\"step\":[{\"@type\":\"HowToStep\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726535152\",\"name\":\"Project Future Cash Flows\",\"itemListElement\":[{\"@type\":\"HowToDirection\",\"text\":\"Make detailed financial projections (usually for 5-10) years until the Business reaches maturity (i.e. GDP-level growth).\"}]},{\"@type\":\"HowToStep\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726569553\",\"name\":\"Calculate Terminal Value\",\"itemListElement\":[{\"@type\":\"HowToDirection\",\"text\":\"Use either the Perpetuity Growth or Exit Multiple method to calculate Terminal Value.\"}]},{\"@type\":\"HowToStep\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726581208\",\"name\":\"Discount Projected Cash Flows and Terminal Value at WACC\",\"itemListElement\":[{\"@type\":\"HowToDirection\",\"text\":\"Discount your Projected Cash Flows and Terminal Value at the Weighted Average Cost of Capital (WACC) to arrive at Enterprise Value.\"}]},{\"@type\":\"HowToStep\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726601355\",\"name\":\"Work from Enterprise Value to Equity Value\",\"itemListElement\":[{\"@type\":\"HowToDirection\",\"text\":\"Subtract Debt and add Cash to arrive at the value attributable to the owners of the business (i.e. Equity Value).\"}]},{\"@type\":\"HowToStep\",\"url\":\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726615179\",\"name\":\"Calculate Price Per Share\",\"itemListElement\":[{\"@type\":\"HowToDirection\",\"text\":\"Divide the Equity Value by the Company's total Share Count to arrive at Price Per Share.\"}]}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->",
  "yoast_head_json": {
    "title": "Walk Me Through a DCF in 5 Steps - The Ultimate Guide (2023)",
    "description": "Looking for a Plain English overview to help you nail 'Walk Me Through a DCF' for an Interview? Check out our proven 5-Step Framework.",
    "robots": {
      "index": "index",
      "follow": "follow",
      "max-snippet": "max-snippet:-1",
      "max-image-preview": "max-image-preview:large",
      "max-video-preview": "max-video-preview:-1"
    },
    "canonical": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/",
    "og_locale": "en_US",
    "og_type": "article",
    "og_title": "Walk Me Through a DCF in 5 Steps - The Ultimate Guide",
    "og_description": "A Plain-English, 5-Step Framework to help you nail your Interview!",
    "og_url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/",
    "og_site_name": "Financeable Training",
    "article_publisher": "https:\/\/www.facebook.com\/financeable1",
    "article_published_time": "2023-01-08T16:50:00+00:00",
    "article_modified_time": "2025-12-21T21:50:27+00:00",
    "og_image": [
      {
        "width": 720,
        "height": 325,
        "url": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
        "type": "image\/png"
      }
    ],
    "author": "Mike Kimpel",
    "twitter_card": "summary_large_image",
    "twitter_description": "A Plain-English, 5-Step Framework to help you nail your Interview!",
    "twitter_creator": "@financeable1",
    "twitter_site": "@financeable1",
    "twitter_misc": {
      "Written by": "Mike Kimpel",
      "Est. reading time": "17 minutes"
    },
    "schema": {
      "@context": "https:\/\/schema.org",
      "@graph": [
        {
          "@type": "Article",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#article",
          "isPartOf": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/"
          },
          "author": {
            "name": "Mike Kimpel",
            "@id": "https:\/\/finance-able.com\/#\/schema\/person\/967da5e27f2e418ee5fcdfb407259ebc"
          },
          "headline": "Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide",
          "datePublished": "2023-01-08T16:50:00+00:00",
          "dateModified": "2025-12-21T21:50:27+00:00",
          "mainEntityOfPage": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/"
          },
          "wordCount": 3038,
          "commentCount": 1,
          "publisher": { "@id": "https:\/\/finance-able.com\/#organization" },
          "image": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage"
          },
          "thumbnailUrl": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
          "keywords": [
            "Common Interview Questions",
            "Discounted Cash Flow Analysis",
            "Valuation"
          ],
          "articleSection": ["Common Interview Questions"],
          "inLanguage": "en-US",
          "potentialAction": [
            {
              "@type": "CommentAction",
              "name": "Comment",
              "target": [
                "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#respond"
              ]
            }
          ]
        },
        {
          "@type": ["WebPage", "FAQPage"],
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/",
          "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/",
          "name": "Walk Me Through a DCF in 5 Steps - The Ultimate Guide (2023)",
          "isPartOf": { "@id": "https:\/\/finance-able.com\/#website" },
          "primaryImageOfPage": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage"
          },
          "image": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage"
          },
          "thumbnailUrl": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
          "datePublished": "2023-01-08T16:50:00+00:00",
          "dateModified": "2025-12-21T21:50:27+00:00",
          "description": "Looking for a Plain English overview to help you nail 'Walk Me Through a DCF' for an Interview? Check out our proven 5-Step Framework.",
          "breadcrumb": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#breadcrumb"
          },
          "mainEntity": [
            {
              "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427"
            },
            {
              "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074"
            },
            {
              "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554"
            }
          ],
          "inLanguage": "en-US",
          "potentialAction": [
            {
              "@type": "ReadAction",
              "target": ["https:\/\/finance-able.com\/walk-me-through-a-dcf\/"]
            }
          ]
        },
        {
          "@type": "ImageObject",
          "inLanguage": "en-US",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#primaryimage",
          "url": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
          "contentUrl": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
          "width": 720,
          "height": 325,
          "caption": ": A stick figure answering an interview question with the title text 'Walk Me Through an LBO' below"
        },
        {
          "@type": "BreadcrumbList",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#breadcrumb",
          "itemListElement": [
            {
              "@type": "ListItem",
              "position": 1,
              "name": "Home",
              "item": "https:\/\/finance-able.com\/"
            },
            {
              "@type": "ListItem",
              "position": 2,
              "name": "Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide"
            }
          ]
        },
        {
          "@type": "WebSite",
          "@id": "https:\/\/finance-able.com\/#website",
          "url": "https:\/\/finance-able.com\/",
          "name": "Financeable Training",
          "description": "Approachable, Intuitive Finance Training",
          "publisher": { "@id": "https:\/\/finance-able.com\/#organization" },
          "potentialAction": [
            {
              "@type": "SearchAction",
              "target": {
                "@type": "EntryPoint",
                "urlTemplate": "https:\/\/finance-able.com\/?s={search_term_string}"
              },
              "query-input": {
                "@type": "PropertyValueSpecification",
                "valueRequired": true,
                "valueName": "search_term_string"
              }
            }
          ],
          "inLanguage": "en-US"
        },
        {
          "@type": "Organization",
          "@id": "https:\/\/finance-able.com\/#organization",
          "name": "Financeable Training",
          "url": "https:\/\/finance-able.com\/",
          "logo": {
            "@type": "ImageObject",
            "inLanguage": "en-US",
            "@id": "https:\/\/finance-able.com\/#\/schema\/logo\/image\/",
            "url": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/07\/Financeable-Icon-For-Google-Large.png",
            "contentUrl": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/07\/Financeable-Icon-For-Google-Large.png",
            "width": 528,
            "height": 528,
            "caption": "Financeable Training"
          },
          "image": {
            "@id": "https:\/\/finance-able.com\/#\/schema\/logo\/image\/"
          },
          "sameAs": [
            "https:\/\/www.facebook.com\/financeable1",
            "https:\/\/x.com\/financeable1",
            "https:\/\/www.linkedin.com\/company\/finance-able",
            "https:\/\/www.youtube.com\/c\/FinanceableTraining"
          ]
        },
        {
          "@type": "Person",
          "@id": "https:\/\/finance-able.com\/#\/schema\/person\/967da5e27f2e418ee5fcdfb407259ebc",
          "name": "Mike Kimpel",
          "image": {
            "@type": "ImageObject",
            "inLanguage": "en-US",
            "@id": "https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g",
            "url": "https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g",
            "contentUrl": "https:\/\/secure.gravatar.com\/avatar\/161bb651581d0cb6b0401dde037e591d4550b0db25a0c549df7a7faf98df2b72?s=96&d=mm&r=g",
            "caption": "Mike Kimpel"
          },
          "sameAs": ["http:\/\/finance-able.com\/"],
          "url": "https:\/\/finance-able.com\/author\/admin\/"
        },
        {
          "@type": "Question",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427",
          "position": 1,
          "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302555427",
          "name": "How to calculate Discounted Cash Flow?",
          "answerCount": 1,
          "acceptedAnswer": {
            "@type": "Answer",
            "text": "The 5 steps to the Discounted Cash Flow process are: <br\/>1) Project Future Cash Flows.<br\/>2) Calculate Terminal Value.<br\/>3) Discount Cash Flows and Terminal Value by the Weighted Average Cost of Capital (or WACC).<br\/>4) Work from Enterprise Value to Equity Value.<br\/>5) Calculate Price Per Share.",
            "inLanguage": "en-US"
          },
          "inLanguage": "en-US"
        },
        {
          "@type": "Question",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074",
          "position": 2,
          "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302649074",
          "name": "What is DCF?",
          "answerCount": 1,
          "acceptedAnswer": {
            "@type": "Answer",
            "text": "DCF stands for 'Discounted Cash Flow.' In a DCF analysis, you value a Business based on its estimated future Cash Flows, which are discounted to reflect the Time Value of Money. ",
            "inLanguage": "en-US"
          },
          "inLanguage": "en-US"
        },
        {
          "@type": "Question",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554",
          "position": 3,
          "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#faq-question-1629302970554",
          "name": "What is a DCF in Investment Banking?",
          "answerCount": 1,
          "acceptedAnswer": {
            "@type": "Answer",
            "text": "Discounted Cash Flow Analysis (or DCF) is a core valuation method in Investment Banking. With a DCF, you discount the future values of a business to arrive at its Intrinsic Value. This Intrinsic approach is then weighed against other market-oriented approaches like Trading and Transaction comparables. ",
            "inLanguage": "en-US"
          },
          "inLanguage": "en-US"
        },
        {
          "@type": "HowTo",
          "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#howto-1",
          "name": "Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide",
          "mainEntityOfPage": {
            "@id": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#article"
          },
          "description": "<strong>How to Answer 'Walk Me Through a DCF' in 5 Steps<\/strong>",
          "step": [
            {
              "@type": "HowToStep",
              "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726535152",
              "name": "Project Future Cash Flows",
              "itemListElement": [
                {
                  "@type": "HowToDirection",
                  "text": "Make detailed financial projections (usually for 5-10) years until the Business reaches maturity (i.e. GDP-level growth)."
                }
              ]
            },
            {
              "@type": "HowToStep",
              "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726569553",
              "name": "Calculate Terminal Value",
              "itemListElement": [
                {
                  "@type": "HowToDirection",
                  "text": "Use either the Perpetuity Growth or Exit Multiple method to calculate Terminal Value."
                }
              ]
            },
            {
              "@type": "HowToStep",
              "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726581208",
              "name": "Discount Projected Cash Flows and Terminal Value at WACC",
              "itemListElement": [
                {
                  "@type": "HowToDirection",
                  "text": "Discount your Projected Cash Flows and Terminal Value at the Weighted Average Cost of Capital (WACC) to arrive at Enterprise Value."
                }
              ]
            },
            {
              "@type": "HowToStep",
              "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726601355",
              "name": "Work from Enterprise Value to Equity Value",
              "itemListElement": [
                {
                  "@type": "HowToDirection",
                  "text": "Subtract Debt and add Cash to arrive at the value attributable to the owners of the business (i.e. Equity Value)."
                }
              ]
            },
            {
              "@type": "HowToStep",
              "url": "https:\/\/finance-able.com\/walk-me-through-a-dcf\/#how-to-step-1624726615179",
              "name": "Calculate Price Per Share",
              "itemListElement": [
                {
                  "@type": "HowToDirection",
                  "text": "Divide the Equity Value by the Company's total Share Count to arrive at Price Per Share."
                }
              ]
            }
          ],
          "inLanguage": "en-US"
        }
      ]
    }
  },
  "author_meta": {
    "display_name": "Mike Kimpel",
    "author_link": "https:\/\/finance-able.com\/author\/admin\/"
  },
  "featured_img": "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-300x135.png",
  "taxonomy_info": {
    "category": [{ "value": 122, "label": "Common Interview Questions" }],
    "post_tag": [
      { "value": 123, "label": "Common Interview Questions" },
      { "value": 121, "label": "Discounted Cash Flow Analysis" },
      { "value": 124, "label": "Valuation" }
    ]
  },
  "featured_image_src_large": [
    "https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png",
    720,
    325,
    false
  ],
  "author_info": {
    "display_name": "Mike Kimpel",
    "author_link": "https:\/\/finance-able.com\/author\/admin\/"
  },
  "comment_info": 440,
  "category_info": [
    {
      "term_id": 122,
      "name": "Common Interview Questions",
      "slug": "common-interview-question",
      "term_group": 0,
      "term_taxonomy_id": 122,
      "taxonomy": "category",
      "description": "",
      "parent": 0,
      "count": 4,
      "filter": "raw",
      "cat_ID": 122,
      "category_count": 4,
      "category_description": "",
      "cat_name": "Common Interview Questions",
      "category_nicename": "common-interview-question",
      "category_parent": 0
    }
  ],
  "tag_info": [
    {
      "term_id": 123,
      "name": "Common Interview Questions",
      "slug": "common-interview-questions",
      "term_group": 0,
      "term_taxonomy_id": 123,
      "taxonomy": "post_tag",
      "description": "",
      "parent": 0,
      "count": 9,
      "filter": "raw"
    },
    {
      "term_id": 121,
      "name": "Discounted Cash Flow Analysis",
      "slug": "discounted-cash-flow-analysis",
      "term_group": 0,
      "term_taxonomy_id": 121,
      "taxonomy": "post_tag",
      "description": "",
      "parent": 0,
      "count": 8,
      "filter": "raw"
    },
    {
      "term_id": 124,
      "name": "Valuation",
      "slug": "valuation",
      "term_group": 0,
      "term_taxonomy_id": 124,
      "taxonomy": "post_tag",
      "description": "",
      "parent": 0,
      "count": 7,
      "filter": "raw"
    }
  ],
  "coauthors": [],
  "tax_additional": {
    "categories": {
      "linked": [
        "<a href=\"https:\/\/finance-able.com\/category\/common-interview-question\/\" class=\"advgb-post-tax-term\">Common Interview Questions<\/a>"
      ],
      "unlinked": [
        "<span class=\"advgb-post-tax-term\">Common Interview Questions<\/span>"
      ]
    },
    "tags": {
      "linked": [
        "<a href=\"https:\/\/finance-able.com\/category\/common-interview-question\/\" class=\"advgb-post-tax-term\">Common Interview Questions<\/a>",
        "<a href=\"https:\/\/finance-able.com\/category\/common-interview-question\/\" class=\"advgb-post-tax-term\">Discounted Cash Flow Analysis<\/a>",
        "<a href=\"https:\/\/finance-able.com\/category\/common-interview-question\/\" class=\"advgb-post-tax-term\">Valuation<\/a>"
      ],
      "unlinked": [
        "<span class=\"advgb-post-tax-term\">Common Interview Questions<\/span>",
        "<span class=\"advgb-post-tax-term\">Discounted Cash Flow Analysis<\/span>",
        "<span class=\"advgb-post-tax-term\">Valuation<\/span>"
      ]
    }
  },
  "comment_count": "1",
  "relative_dates": {
    "created": "Posted 3 years ago",
    "modified": "Updated 6 months ago"
  },
  "absolute_dates": {
    "created": "Posted on January 8, 2023",
    "modified": "Updated on December 21, 2025"
  },
  "absolute_dates_time": {
    "created": "Posted on January 8, 2023 11:50 am",
    "modified": "Updated on December 21, 2025 4:50 pm"
  },
  "featured_img_caption": "",
  "series_order": "",
  "gopublish_integration": {
    "active": true,
    "seo_fields_available": true,
    "seo_fields": {
      "title": "gopublish_seo_title",
      "description": "gopublish_seo_description"
    }
  },
  "_links": {
    "self": [
      {
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/posts\/39613",
        "targetHints": { "allow": ["GET"] }
      }
    ],
    "collection": [
      { "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/posts" }
    ],
    "about": [
      { "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/types\/post" }
    ],
    "author": [
      {
        "embeddable": true,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/users\/1"
      }
    ],
    "replies": [
      {
        "embeddable": true,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/comments?post=39613"
      }
    ],
    "version-history": [
      {
        "count": 282,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/posts\/39613\/revisions"
      }
    ],
    "predecessor-version": [
      {
        "id": 56552,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/posts\/39613\/revisions\/56552"
      }
    ],
    "wp:featuredmedia": [
      {
        "embeddable": true,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/media\/40655"
      }
    ],
    "wp:attachment": [
      {
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/media?parent=39613"
      }
    ],
    "wp:term": [
      {
        "taxonomy": "category",
        "embeddable": true,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/categories?post=39613"
      },
      {
        "taxonomy": "post_tag",
        "embeddable": true,
        "href": "https:\/\/finance-able.com\/wp-json\/wp\/v2\/tags?post=39613"
      }
    ],
    "curies": [
      { "name": "wp", "href": "https:\/\/api.w.org\/{rel}", "templated": true }
    ]
  }
}