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dcf-modeling

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Builds a discounted cash flow model with WACC, dual terminal value, and sensitivities when you need an intrinsic value from cash flows.

packs/investment-banking/skills/dcf-modeling/SKILL.md

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# DCF Modeling Agent

## When to use
Use this when you need an intrinsic value based on cash flows rather than a market read. Typical triggers: the peer set is thin or noisy, the business is undergoing a transition the multiples miss, or you want a fundamentals-anchored cross-check on comps. Reach for it when value should be driven by what the business generates, not what the market currently pays.

## What it does
It produces a DCF: projected unlevered free cash flows discounted at WACC to an enterprise value, a terminal value computed two ways, an EV-to-equity bridge, and a sensitivity grid on WACC and growth.

## Method
1. Project unlevered free cash flow. Build FCF independent of financing.
   - Start from EBIT, tax it at the marginal rate to get NOPAT, add back D&A, subtract capex, and subtract the increase in net working capital, for each explicit year (usually 5 to 10).

2. Build the cost of equity via CAPM. Price the equity risk.
   - Cost of equity equals the risk-free rate plus beta times the equity risk premium; relever beta to the subject capital structure if it was drawn from peers.
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