First ascertain the WACC,
secondly calculate the sum of the quotients of the average annual cash flow and one plus the WACC to the power of the period number or year in consecutive order for the preceding five,
or ten years depending on the length required for projection by discounting future cash flows,
and finally find the quotient of the sum and the number of shares outstanding.
If projecting for ten years cash flow,
then use the average of ten years, if for five years,
ad infinitum..
secondly calculate the sum of the quotients of the average annual cash flow and one plus the WACC to the power of the period number or year in consecutive order for the preceding five,
or ten years depending on the length required for projection by discounting future cash flows,
and finally find the quotient of the sum and the number of shares outstanding.
If projecting for ten years cash flow,
then use the average of ten years, if for five years,
ad infinitum..
Note: This same valuation process can be replicated using earnings in a version known as
earnings based DCF, if cash flows are inconsistent.
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