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DCF - Discounted Cash Flow____Any tips?!?!

  • 23-04-2008 9:53am
    #1
    chris_oc
    Registered Users, Registered Users 2 Posts: 230 ✭✭


    Hi all!
    I'm not quite sure if this is the right place to be asking this but I couldn't think other place to write it!

    ok so here it is, my boss just asked me to do out a discounted cashflow for him. Gods honest truth, I haven't a f**king clue where to start!!:o
    I'm not in Ireland at the moment so getting out my old college notes is out...
    Has anyone any tips or ideas on useful websites to help me or anything??

    Any feedback would be much appreciated,

    Thanks in advance!


Comments

  • #2
    animal
    Closed Accounts Posts: 31 ✭animal


    I havent seen one of those done in about 2 years but you will need some info to start with.
    You will prob have seen this by now if you have read your notes but id imagine your boss may have asked you to do something like appraise a potential investment or maybe do a Goodwill impairment review?
    From memory, you will need:
    1. the expected cashflows for the next X number of years.
    2. What discount rate should you apply? My financial institution uses a Discount rate of 9% for G'wll imp reviews. (you will need to know why you use such a rate. Maybe you could look up the expected rate of inflation in Ireland or something)

    -Do you have discount tables or know how to derive a discount factor?
    - Once you get your head around what your doing Excel can do the rest.
    -Look up the formulae in excel. There is an NPV formula that you should learn to use. The help files are grand as long as your patient.

    Maybe if you give more info about what the DCF is for then someone may be able to help. My memory is a bit sketchy.


  • #3
    charba
    Closed Accounts Posts: 299 ✭✭charba


    animal wrote: »
    From memory, you will need:
    1. the expected cashflows for the next X number of years.
    2. What discount rate should you apply? My financial institution uses a Discount rate of 9% for G'wll imp reviews. (you will need to know why you use such a rate. Maybe you could look up the expected rate of inflation in Ireland or something)

    -Do you have discount tables or know how to derive a discount factor?
    - Once you get your head around what your doing Excel can do the rest.
    -Look up the formulae in excel. There is an NPV formula that you should learn to use. The help files are grand as long as your patient. .


    I'm actually studying this for exams at the minute. This is exactly what you need. I'm guessing you have revenues, and expenses calculate the profit or loss per year.
    Ask if you need to include an inflation rate for any of the expenses. Based on the Net cash flows apply the discount rate for the number years at the rate you have been told from the discount tables net against the initial outlay of the project.


    The discount tables can be found here:
    http://www.accaglobal.com/archive/sa_oldarticles/28448


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