WACC
PREDICTABILITY
GROWTH WINDOWS
FCF PROJECTION
SENSITIVITY
PER-YEAR CASH FLOWS
| Year | CF | Discount factor | PV | Cumulative PV |
|---|---|---|---|---|
| 1 | 7.81 | 0.9399 | 7.34 | 7.34 |
| 2 | 8.12 | 0.8835 | 7.17 | 14.52 |
| 3 | 8.44 | 0.8304 | 7.01 | 21.53 |
| 4 | 8.78 | 0.7806 | 6.85 | 28.38 |
| 5 | 9.13 | 0.7337 | 6.70 | 35.07 |
| 6 | 9.49 | 0.6896 | 6.54 | 41.62 |
| 7 | 9.86 | 0.6482 | 6.39 | 48.01 |
| 8 | 10.26 | 0.6093 | 6.25 | 54.26 |
| 9 | 10.66 | 0.5727 | 6.11 | 60.37 |
| 10 | 11.09 | 0.5383 | 5.97 | 66.33 |
| 11 | 11.36 | 0.5060 | 5.75 | 72.08 |
| 12 | 11.65 | 0.4756 | 5.54 | 77.62 |
| 13 | 11.94 | 0.4470 | 5.34 | 82.96 |
| 14 | 12.24 | 0.4202 | 5.14 | 88.10 |
| 15 | 12.54 | 0.3950 | 4.95 | 93.06 |
| 16 | 12.86 | 0.3712 | 4.77 | 97.83 |
| 17 | 13.18 | 0.3489 | 4.60 | 102.43 |
| 18 | 13.51 | 0.3280 | 4.43 | 106.86 |
| 19 | 13.84 | 0.3083 | 4.27 | 111.13 |
| 20 | 14.19 | 0.2898 | 4.11 | 115.24 |
REVERSE DCF
At $232.77, the market implies a stage-1 growth rate of 13.9%.
MARKET IMPLIES
13.9%
YOUR ASSUMPTION
4.0%
DELTA
+9.9pp
If $232.77 is correct and your other inputs (WACC 6.4%, 10+10y, terminal 2.5%) hold, the market needs JNJ to grow cash flow at 13.9% annually for the next 10 years.