Discounted Cash Flows (DCF),”1. Forecast as far as you can into the future (usually 3-5 years) and construct pro forma statements.2. Compute the FCF for each year.3. In the last year
estimate a terminal value and add it to the last year’s FCF from step 2.4. Compute an appropriate discount rate.5. Use TVM to discount back the cash flows to PV.”