Market
$101.99
Fair
$88.99
Financials Key Metrics
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Market Price
NA USD
Fair Price
NA USD
Safety Of Margin
↑NA
DCF Assumptions
Assumption Input
Discount Rate
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Perpetual Growth Rate
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Beta
Reset to Default
Tax Rate
Reset to Default
Risk-Free Rate
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Projected Free Cash Flow
Years
Free Cash Flows
Discounted Free Cash Flows
% Growth
DCF Formula

The discount rate is typically determined by calculating the firm's Weighted Average Cost of Capital, or WACC (See the WACC section to see full steps to calculate the WACC). Investors use WACC as a representation of the expected Required Rate of Return from their investment in the company.

If you have entered your own value, the Discount Cash Flow calculation will be based off of your provided value for the discount rate.


Where:
E = Market value of the firm's Equity
D = Market value of the firm's debt
V = E + D
Re = Cost of Equity
Rd = Cost of Debt
Tc = Corporate tax rate




Where:
FCFn = Last Projected Free Cash Flow
g = Perpetual Growth Rate
r = Discount Rate









Free Cash Flow

Historical Free Cash Flow
Years
Free Cash Flows
% Growth
Projected Free Cash Flow
Years
Free Cash Flows
Discounted Free Cash Flows
% Growth
Cost Of Capital
Weight Cost W x C
Equity NA NA NA
Debt Cost NA NA NA
WACC NA
Cost Of Debt
Effective Tax Expense NA
Effective Tax Rate NA
(1 - Effective Tax Rate) NA
Short Term Debt NA
Long Term Debt NA
Total Debt NA
Cost Of Debt NA
Capital Structure
Market Cap NA NA
ST Debt NA NA
LT Debt NA NA
Total NA NA
Cost of Equity
Risk Free Rate NA
Beta NA
Expected Market Return NA
Cost Of Equity NA
WACC Formula (Weighted Average Cost of Capital)
Where:
E = Market value of the firm's Equity
D = Market value of the firm's debt
V = E + D
Re = Cost of Equity
Rd = Cost of Debt
Tc = Corporate tax rate

The first part of the formula is cost of equity. Cost of equity is the required rate of return companies expect to pay out to equity investors. Many models can be used to estimate this cost, but the basic model used is the Capital Asset Pricing model (CAPM). CAPM is defined as the following:


Where:
Rf = Risk-Free Rate (10 yr treasury bond rate).
B = Beta (Systematic risk compared to the overall market).
Rm = Expected return of the market.







Where:
Rd = (Interest Expense) / (Total Debt)
Tc = (Tax Expense) / (Pretax Income)