These are projects posted by the students of Dr. Gove Allen at Brigham Young University. These students have taken one semester-long course on VBA and generally have had no prior programming experience

Friday, December 10, 2010

Discounted Cash Flow Model

Executive Summary

An essential part of working in the financial services industry is performing valuation on projects, assets, or entire firms. This allows corporate management, investment bankers, private equity managers, and other financial professionals to evaluate the potential profitability of a financial undertaking. There are many different valuation methods, but perhaps the most popular and widely-used method is the discounted cash flow model.

The discounted cash flow model, or DCF, projects out cash flows over a number of periods, then discounts them back to the present using an appropriate discount rate. Essentially this process allows you to determine the net present value (NPV) of the streams of cash flows to be expected from the asset or company you are evaluating. In other words, you are able to determine what it is worth and whether is a worthwhile investment.

This program is designed to assist in the process of importing data from online databases and building a DCF valuation model. The model was created for those familiar with Microsoft Excel and financial modeling since flexibility and sensitivity analysis is a crucial part of creating a DCF. Valuation is just as much an art as it is a science. My goals in writing this program were to provide users with data imported from the Internet to guide their assumptions, create an outline that is easily understood and manipulated establish checks set to trigger if the user has skipped a step or should be aware of an abnormal variable, and most importantly, automate the valuation process as much as possible to maximize a financial analyst’s time and resources.

No comments:

Post a Comment

Blog Archive