From the course: Investment Evaluation
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Solve for DCF - Microsoft Excel Tutorial
From the course: Investment Evaluation
Solve for DCF
- [Instructor] I'm gonna work out of exercise file 02_02_Begin. Let's take a look at this lovely discounted cash flows formula again. Okay, so we have to figure out a couple of variables. You've got the cash flows, that's CF, we've got the discount cash flows, which is DCF, and we've got the r, which is the discount rate. So first I want to work on this cash flow for the first 30 years and you can see I have 30 years mapped out here. So the cash flow for year one is simply the $100,000 that we get from the 10% stake in the company. Year two is gonna be 102.5% of 100,000. How did I get that? Well I have an annual growth rate of 2.50. So I know that each year, year after year, my money's gonna grow by 2.5%. So that's gonna be $100,000 times 1.025. So now I have $102,500. We're gonna do the same thing here for year three. I'm gonna multiply that by 1.025. Hit enter and now I have 105 and some change. And I am gonna actually carry this operation all the way down. And the way I did that…
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