In a DCF analysis, you value a company with the Present Value of its future Free Cash Flows plus the Present Value of its Terminal Value.

- First, Project a company’s Free Cash Flow over a period of time (usually 5-10 years)
- Calculate the company’s Discount Rate
- Discount the cash flows back to their Present Value and sum them up
- Calculate the company’s Terminal value
- Discount the Terminal Value to its Present Value
- Add the discounted Free Cash Flows to the discounted Terminal Value