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Money & investing · course 72 of 105

DCF Valuation, Start to Finish

Value a company by discounted cash flow, by hand: present value, free cash flow, the cost of capital (CAPM and WACC), then a full DCF all the way to a value per share.

4 modules

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What it teaches

How a discounted cash flow valuation works, one step at a time: present value and discount factors, streams and perpetuities (with and without growth), free cash flow from EBIT, the after-tax cost of debt, CAPM, WACC, then one full DCF of a made-up company: PV of the forecast, terminal value (perpetuity growth and exit multiple), enterprise value, equity value, value per share, and how much the answer moves when growth changes. The AI asks 3 questions, places you, shows a short card per module, then gives you one calculation at a time and names the slip when your answer matches one it lists.

It teaches the method; it never values a real stock or says what to buy.

How long

38 items. About 30-60 rounds (about 30 for a student who knows the basics, about 60 for a beginner) plus a 12-item final: 2-3 sessions (estimate, not timed with a real student). A calculator is fine. The tutor gives a one-line save code at the end of each session.

The modules

4 modules, drilled one item at a time.

  1. M0

    The ideas

    Concept questions

  2. M1

    Discounting

    Discount a cash flow, a stream or a perpetuity

  3. M2

    Free cash flow and the cost of capital

    Free cash flow, CAPM and WACC

  4. M3

    One full DCF

    One full DCF, step by step

Before it teaches, it asks

  1. 1
    What do you need DCF for (finance class, an interview, a job in banking or corporate finance, your own investing), and have you built one before?
  2. 2
    What is $1,000 received in 3 years worth today, at a 10% discount rate?
  3. 3
    Equity $600m costs 10%; debt $400m costs 6% before tax; tax 25%. WACC?

What’s exact, and what isn’t

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Straight from the course’s own notes.

Computed by script
Every key with exact fractions; each item shows the ± it allows (on discounting items, the gap a student gets by rounding discount factors to 4 decimals); every listed wrong answer is computed by running the slip it names and is outside the ±; the PV of a stream is checked against the annuity formula, WACC two ways, enterprise value two ways. A separate float re-computation agreed on all 30 keys, and a planted-error test (6 errors) was caught.
Sourced
The definitions and rules from Wikipedia’s finance pages (present value, DCF, free cash flow, WACC, CAPM, terminal value, enterprise value); short quotes matched word for word on the live pages (re-checked 2026-10-11). No number comes from a page.
Made up on purpose
Northwind Tools and every company number.
Not in it yet
Mid-year discounting, levered and unlevered beta, three-statement models, Excel’s NPV/XNPV.