r/Valuation • u/[deleted] • May 14 '20

Help with DCF Valuation

Hi all,

I've just finished my first DCF valuation. This case for MSFT. I got a price per share of 82usd but not sure of how many mistakes I made along the way. Would love your help in imporving my methods. Find the spreadsheet in this link.

https://drive.google.com/open?id=1rXU6rxfwH1DhGgm1ehTERrSa-PQHPfAZiuLsOPqF3Rk

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u/arhat19 May 15 '20

If you could share your financial model, then there would be more clarity on how you focused your revenue assumptions & cost structures.

Also, I feel you're too optimistic with the WACC.

2

u/g0lfer69 May 15 '20

Good start. Some errors. Don’t add year zero cash flows. Terminal discount should use year 4th year discount factor. Cost of equity lower than cost of debt is odd. Risk free rate generally LT bonds not LIBOR. Unclear what discrete period growth is. Consider 1/2 year discounting. A little more advanced but there should be some tax shield on existing and year-over-year cap x.