WACC
PREDICTABILITY
GROWTH WINDOWS
FCF PROJECTION
SENSITIVITY
PER-YEAR CASH FLOWS
| Year | CF | Discount factor | PV | Cumulative PV |
|---|---|---|---|---|
| 1 | 7.80 | 0.9386 | 7.32 | 7.32 |
| 2 | 8.11 | 0.8810 | 7.15 | 14.47 |
| 3 | 8.43 | 0.8269 | 6.97 | 21.44 |
| 4 | 8.77 | 0.7762 | 6.81 | 28.25 |
| 5 | 9.12 | 0.7285 | 6.64 | 34.89 |
| 6 | 9.48 | 0.6838 | 6.48 | 41.37 |
| 7 | 9.85 | 0.6419 | 6.32 | 47.69 |
| 8 | 10.24 | 0.6025 | 6.17 | 53.87 |
| 9 | 10.65 | 0.5655 | 6.02 | 59.89 |
| 10 | 11.07 | 0.5308 | 5.88 | 65.77 |
| 11 | 11.35 | 0.4982 | 5.65 | 71.42 |
| 12 | 11.63 | 0.4676 | 5.44 | 76.86 |
| 13 | 11.93 | 0.4389 | 5.23 | 82.10 |
| 14 | 12.22 | 0.4120 | 5.04 | 87.13 |
| 15 | 12.53 | 0.3867 | 4.84 | 91.98 |
| 16 | 12.84 | 0.3630 | 4.66 | 96.64 |
| 17 | 13.16 | 0.3407 | 4.48 | 101.12 |
| 18 | 13.49 | 0.3198 | 4.31 | 105.44 |
| 19 | 13.83 | 0.3002 | 4.15 | 109.59 |
| 20 | 14.18 | 0.2817 | 3.99 | 113.58 |
REVERSE DCF
At $266.73, the market implies a stage-1 growth rate of 16.0%.
MARKET IMPLIES
16.0%
YOUR ASSUMPTION
4.0%
DELTA
+12.1pp
If $266.73 is correct and your other inputs (WACC 6.5%, 10+10y, terminal 2.5%) hold, the market needs JNJ to grow cash flow at 16.0% annually for the next 10 years.