From the course: Investment Evaluation
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Challenge 2: Calculate DCF over 30 years - Microsoft Excel Tutorial
From the course: Investment Evaluation
Challenge 2: Calculate DCF over 30 years
- It's time for your next challenge. Let's see if you can calculate how much money should be spent on an investment when give the opportunity. I'm in 02_03_challenge2 in the exercise files. Let's take a look at our parameters. Imagine that you're offered a rousing 50% stake in a company and you have some extra cash lying around. Or maybe you're looking to do some tax loss harvesting and sell your stocks, whatever the case may be. You think that you'll hold onto the stake for at least 30 years. The company's free cash flows last year were $100,000. But they need funding and they also want your expertise. They're expecting a steady 4% growth year over year for the first five years and then 10% steady growth every year after that. After doing some market research, you determine that the discount rate is 12%. What's the maximum amount of money you should pay for this opportunity? This challenge should take you about five minutes to complete, good luck.
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