One of the fundamental valuation techniques is the net present value (NPV) calculation. This relies on calculated the sum of the discounted cash flows produced by a business or project in order to determine the business or projects value today.
The tool helps the user to determine what the free cash flows are for the business today and how these might grow over time. The tool also takes into account any terminal growth beyond the end of the 10 year timeline. Discount rates are applied to these free cash flows in order to discount them. The discount rates are entered on an annual basis and for the terminal value.
To use the tool, simply enter your assumptions regarding the components of free cash flow today, the free cash flow growth assumptions, terminal growth assumptions, and discount rates. Assumptions are entered into section "3 Assumptions".
The tool is laid out as a one page document for ease of use so that the user can assess the impact of assumptions on the valuation depicted in section "1 Results".
Section "2 Cell formats and summary" contains a key for cell formats and a summary of what the tool is used for an how to use it.
