Company XYZ's Intrinsic Enterprise Value Calculation

Understanding Intrinsic Enterprise Value Calculation

To calculate the intrinsic enterprise value, we need to discount the future cash flows and the terminal value to their present value. The terminal value is determined based on the perpetual growth rate assumption outlined in the Control Panel tab.

Discounted Cash Flows and Terminal Value

The discounted cash flows represent the company's expected future cash flows, which are adjusted to their present value using the WACC as the discount rate. The terminal value, on the other hand, represents the cash flows beyond the explicit forecast period, assuming a perpetual growth rate of 2%.

Weighted Average Cost of Capital (WACC)

The WACC is used as the discount rate to calculate the present value of the cash flows and terminal value. It takes into account the company's cost of equity, cost of debt, and the proportion of equity and debt in the capital structure.

Significance of Intrinsic Enterprise Value

The intrinsic enterprise value reflects the present value of the company's expected future cash flows and terminal value. It helps investors evaluate the company's worth and make informed decisions about investments.

It's important to note that the calculated intrinsic enterprise value is based on the assumptions provided, such as the perpetual growth rate and the use of WACC as the discount rate.