DCF Model Template

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Written by CFI Team

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DCF Model Template

This DCF model template provides you with a foundation to build your own discounted cash flow model with different assumptions.

Below is a preview of the DCF model template:

DCF Model Template Screenshot

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DCF Step 1 – Build a forecast

The first step in the DCF model process is to build a forecast of the three financial statements, based on assumptions about how the business will perform in the future. On average, this forecast typically goes out about 5 years. The forecast has to build up to unlevered free cash flow (free cash flow to the firm or FCFF).

DCF Step 2 – Calculate the Terminal Value

We continue walking through the DCF model steps with calculating the terminal value. There are two approaches to calculating a terminal value: perpetual growth rate and exit multiple.

DCF Step 3 – Discount the cash flows to get the present value

In step 3 of this DCF walk through it’s time to discount the forecast period (from step 1) and the terminal value (from step 2) back to the present value using a discount rate. The discount rate used is typically the company’s weighted average cost of capital (WACC).

The best way to calculate the present value in Excel is with the XNPV function, which can account for unevenly spaced out cash flows (which are very common).

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Additional Resources

CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:

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Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

In order to become a great financial analyst, here are some more questions and answers for you to discover:

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