A tool to calculate DCF valuation for various inputs

[gzbkel]

I created a tool to perform DCF valuation for multiple scenarios with varying inputs.
The tool reads an XML file that contains your parameters for the DCF calculation. You can specify multiple values for the parameters, and the tool will calculate the fair value per share for each possible combination of parameters.

The calculation method is based on chapters 4 and 5 of the following tutorial:
http://www.investopedia.com/university/dcf/

These are the inputs required in the XML file:

<parameter name="e">: Equity
<parameter name="d">: Debt
<parameter name="os">: Number of outstanding shares.
<parameter name="fcf_y0">: Starting FCF
<parameter name="fcf_series">: Projected FCF for the next n years. Separate each value with a comma
<parameter name="t_fcf_g">: Terminal FCF growth rate after the nth year
<parameter name="rf">: Risk-free rate
<parameter name="erp">: Equity risk premium
<parameter name="rd">: Cost of debt
<parameter name="b">: Beta
<parameter name="ctr">: Corporate tax rate

Note that you cannot specify multiple values for Equity, Debt, number of outstanding shares, and corporate tax rate. All other parameters can be varied.

Example:
You want to calculate the DCF for a company with equity of 75M, debt of 50M, and 1M of outstanding shares. The FCF for year 0 is 16M. Your FCF projection for the next 5 years:
Year 1: 18.5
Year 2: 21.3
Year 3: 21.4
Year 4: 19.9
Year 5: 21.3
After the 5th year, you estimate that the FCF terminal growth is either 3% or 4% (Try both values)

You assume the following inputs:
- Risk-free rate: Try values of 4%, 5%, and 6%
- Equity risk premium: 8%
- Cost of debt: 5%
- Beta: 1.3
- Corporate tax rate: 30%

In this example, multiple values have been specified for the Risk-free rate and the FCF terminal growth rate. Therefore, the tool will calculate DCF for the following combinations:
- Risk-free rate=4%, FCF terminal growth rate=3%
- Risk-free rate=5%, FCF terminal growth rate=3%
- Risk-free rate=6%, FCF terminal growth rate=3%
- Risk-free rate=4%, FCF terminal growth rate=4%
- Risk-free rate=5%, FCF terminal growth rate=4%
- Risk-free rate=6%, FCF terminal growth rate=4%

This is what your XML will look like for the above example:
(You can find a copy of this file in the ZIP)

Code:

<?xml version="1.0" encoding="utf-8" ?>
<parameters>
  <parameter name="e">
    <value>75</value>
  </parameter>
  <parameter name="d">
    <value>50</value>
  </parameter>
  <parameter name="os">
    <value>1</value>
  </parameter>
  <parameter name="fcf_y0">
    <value>16</value>
  </parameter>
  <parameter name="fcf_series">
    <value type="value">18.5,21.3, 21.400, 19.9, 21.3</value>
  </parameter>
  <parameter name="t_fcf_g">
    <value desc="conservative">0.03</value>
    <value>0.04</value>
  </parameter>
  <parameter name="rf">
    <value desc="low estimate">0.04</value>
    <value desc="medium estimate">0.05</value>
    <value desc="high estimate">0.06</value>
  </parameter>
  <parameter name="erp">
    <value desc="avg">0.08</value>
  </parameter>
  <parameter name="rd">
    <value desc="current">0.05</value>
  </parameter>
  <parameter name="b">
    <value>1.3</value>
  </parameter>
  <parameter name="ctr">
    <value>0.30</value>
  </parameter>
</parameters>

The "desc" attribute is optional and for your own reference. It does not affect the calculation.


To use:
1) Download and unzip the file.
2) Double-click [DCFTool.exe].
3) Click [Browse] to select your own file or the included sample [DCFtemplate_ref.xml].
4) Click [Calculate] to view the calculations.

Looking forward to suggestions or bug reports