§ 01
AAPL — Current Price, Market Cap, P/E Ratio. Open AAPL on the Ledge to see current values.
§ 02
Intrinsic Value = Σ [FCFₜ / (1 + WACC)ᵗ] + Terminal Value / (1 + WACC)ⁿ
§ 03
| DCF Component | What It Captures | Key Input |
|---|---|---|
| Projected FCFs | Near-term cash generation (typically 5–10 years) | Revenue growth, margins, capex |
| Discount Rate (WACC) | Time value of money + risk premium | Cost of equity, cost of debt, capital structure |
| Terminal Value | All cash flows beyond projection period | Perpetual growth rate or exit multiple |
§ 04
A DCF is only as good as its assumptions. The model gives you a precise number, but that precision is an illusion — the real value is in understanding which assumptions drive the answer and how sensitive the output is to each one.
§ 05
Look up a company in **Fundamentals** and note its current market cap. Then estimate: Is the market pricing in 5% growth or 15% growth? A DCF helps you reverse-engineer what the market assumes.
§ 06
A DCF model produces an intrinsic value of $85 per share, but the stock trades at $100. What does this mean?
§ 07
Five questions · AI feedback
Sit with the ideas.
A company generates $100M in FCF today, growing at 5% annually. With a WACC of 10%, what is the approximate value of next year's FCF in today's dollars?
Why:
Try this in paper trading
DCF a stock — buy with margin of safety
Run a back-of-envelope DCF on a stock you've researched. Estimate fair value. Paper-buy ONLY if the current market price is at least 25% below your fair-value estimate. If it isn't, write down why you waited.
Open paper portfolio →Practice mode — simulated trades, not investment advice.