Series 79: 4.4.1. Example Discounted Cash Flow Analysis

Taken from our Series 79 Online Guide

4.4.1. Example Discounted Cash Flow Analysis

This section provides a step-by-step example of a DCF analysis for Bunyan’s Cut, a hypothetical forest products company.

Step 1: Estimate future cash flow. In conducting a five-year FCFF projection for our sample company, Bunyan’s Cut, you are presented with the following data:

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Bunyan’s Cut Historical Operating Data (in millions)

FY 2017

FY 2018

FY 2019

Revenue

$350.00

$385.00

$420.00

% of growth

----

10.00

9.10

EBITDA

$80.50

$86.60

$92.40

Depreciation and Amortization

7.00

7.7

8.4

EBIT

$73.50

$78.90

$84.00

Less: Taxes (37%)

27.2

29.2

31.1

Plus Depreciation and Amortization

7.00

7.7

8.4

Less: Capex

8.8

9.6

10.5

Less: Change in NWC

----

4.0

3.8

Unlevered Free Cash Flow to the Firm (FCFF)

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