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

Tuesday, December 4, 2012

Discounted Cash Flow Model

Valuation models are essential in the financial services industry.  Valuation models are used for individual projects, assets, or entire firms. These models are used to determine the profitability of a financial activity. Valuation models range from dividend discount models to relative valuation models. However, the most widely-used method is the discounted cash flow model.

The discounted cash flow model, or DCF model, values a project using the time value of money concept. All present cash flows and future cash flows are estimated and discounted to their present values. The sum of all cash flows is the net present value (NPV), which is taken as the value or price of the cash flows. In other words, it enables the user to determine the project’s worth and its potential as an investment opportunity.

This program enables the user to import data from online databases and build a DCF valuation model. The program was designed for those familiar with valuation modeling and Excel. An essential part of valuation models is the flexibility of the model and assumptions. The ability to change the assumptions is a crucial part of creating a DCF model.

This program was written to efficiently maximize time and resources.  This program is user friendly and contains four buttons: “Show Instructions”, “Gather Data”, “Create DCF Model”, and “Reset Spreadsheet”.  These four buttons allow the user to create the DCF model.

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1 comment:

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