[Verse 1] Cash flows projected years ahead But what's their worth in present thread? The discount rate will bridge that gap WACC's the key to close the trap Cost of debt and equity combined Weighted by their market find Tax shields reduce the debt expense Making calculations dense [Chorus] WACC divides each future gain Terminal value breaks the chain Perpetuity growth forever flows Exit multiples when the curtain closes Discount back to present day NPV will show the way Enterprise value minus debt Equity value you will get [Verse 2] Beta measures systematic risk Market premium can't dismiss Risk-free rate anchors the base Capital structure sets the pace After-tax cost of debt appears Multiply by debt's frontiers Equity weight times equity cost Add them up, nothing's lost [Chorus] WACC divides each future gain Terminal value breaks the chain Perpetuity growth forever flows Exit multiples when the curtain closes Discount back to present day NPV will show the way Enterprise value minus debt Equity value you will get [Bridge] Gordon growth assumes steady state Terminal cash flow calculate Divide by WACC minus growth That's the perpetuity oath Or take comparable multiples Revenue, EBITDA principles Apply to terminal year metrics Exit value mathematics [Verse 3] Present value each year's stream Add terminal value to the scheme Sum them up for enterprise worth Subtract net debt to give rebirth Equity value emerges clean DCF reveals what shares should mean Sensitivity tests the assumptions made Scenarios where value's weighed [Chorus] WACC divides each future gain Terminal value breaks the chain Perpetuity growth forever flows Exit multiples when the curtain closes Discount back to present day NPV will show the way Enterprise value minus debt Equity value you will get [Outro] Markets may fluctuate and sway But intrinsic value holds its say DCF methodology Unlocks true company clarity
← DCF Valuation: Cash Flow Projections | Trading Multiples Analysis →