DCF Analysis

$-$ Apply the appropriate discount rate for each scenario $($worst case, base case, best case$)$ to calculate the present value of the FCFs over the $*$NEXT$*5$ years.

$-$ Determine the terminal value using the perpetuity growth method.

$-$ Discount the terminal value to present value using the appropriate discount rate.

$-$ Sum the present values of the FCFs and terminal value to find the enterprise value.

FCF $*$PAST$*3$ Years

Year $1$ $$200,000\mathrm{.}00$

Year $2$ $$500,000\mathrm{.}00$

Year $3$ $$2,200,000\mathrm{.}00$

Assumptions:

Discount rate$/$ WACC: $11\%$

No debt

$-$ It pays no state income tax.

$-$ We will consider three scenarios for the next $5$ years:

$1.$ Worst case: Compound Annual Growth Rate $($CAGR$)$ of $2\%$

$2.$ Base case: CAGR of $8\%$

$3.$ Best case: CAGR of $10\%$