WACC
PREDICTABILITY
GROWTH WINDOWS
FCF PROJECTION
SENSITIVITY
PER-YEAR CASH FLOWS
| Year | CF | Discount factor | PV | Cumulative PV |
|---|---|---|---|---|
| 1 | 9.53 | 0.8968 | 8.55 | 8.55 |
| 2 | 9.92 | 0.8043 | 7.98 | 16.53 |
| 3 | 10.32 | 0.7214 | 7.44 | 23.97 |
| 4 | 10.74 | 0.6469 | 6.95 | 30.92 |
| 5 | 11.17 | 0.5802 | 6.48 | 37.40 |
| 6 | 11.62 | 0.5204 | 6.05 | 43.45 |
| 7 | 12.09 | 0.4667 | 5.64 | 49.09 |
| 8 | 12.58 | 0.4185 | 5.27 | 54.36 |
| 9 | 13.09 | 0.3754 | 4.91 | 59.27 |
| 10 | 13.62 | 0.3366 | 4.59 | 63.86 |
| 11 | 13.96 | 0.3019 | 4.22 | 68.07 |
| 12 | 14.31 | 0.2708 | 3.87 | 71.95 |
| 13 | 14.67 | 0.2428 | 3.56 | 75.51 |
| 14 | 15.03 | 0.2178 | 3.27 | 78.78 |
| 15 | 15.41 | 0.1953 | 3.01 | 81.79 |
| 16 | 15.80 | 0.1752 | 2.77 | 84.56 |
| 17 | 16.19 | 0.1571 | 2.54 | 87.10 |
| 18 | 16.60 | 0.1409 | 2.34 | 89.44 |
| 19 | 17.01 | 0.1264 | 2.15 | 91.59 |
| 20 | 17.44 | 0.1133 | 1.98 | 93.57 |
REVERSE DCF
At $531.49, the market implies a stage-1 growth rate of 30.6%.
MARKET IMPLIES
30.6%
YOUR ASSUMPTION
4.0%
DELTA
+26.6pp
If $531.49 is correct and your other inputs (WACC 11.5%, 10+10y, terminal 2.5%) hold, the market needs MSFT to grow cash flow at 30.6% annually for the next 10 years.