Discounted Cash Flow (DCF) Tutorial Part II. Wednesday, February 7th, 2007. Recap from Last Week. Basic Underlying Principles Time Value of Money (A dollar today is worth more than a dollar tomorrow) Present/Future Value PV=FV/(1-i)^n FV=PV(1+i)^n Opportunity Cost
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Wednesday, February 7th, 2007
$60 Share Price
x 858.89 Shares Outstanding (mm)
= $51,533 Market Capitalization or Market Value of Equity
Less: Capital Expenditures (CAPEX)
= Free Cash Flow to Equity
52.42b Market Cap
Note: Revenues and Net Income will be found on the Income Statement and Depreciation and CAPEX will be found on the Cash Flow Statement
cheaper laptop prices, while mobility products sales are increasing
as a percentage of sales
*Note: This tells you that according the DCF Model, we can buy 1 share of Dell for $23.52 today, while the NPV of their future cash flows are valued at $26.14 per share.