A DCF Model is now one of the most commonly used valuation methods for determining the value of a company or an asset. Discounted Free Cash Flow analysis is part of the income approach and thus one of the most theoretically sound valuation methods because the value is determined by the expected income from a business or asset.
Building a Discounted Cash Flow (DCF)! model is a very popular financial valuation method and widely used among professional investors to derive the value of a company and base their decision-making on such analysis.
A DCF model is mostly built with a spreadsheet program such as MS Excel. It requires a projection of the company’s Free Cash Flows to Firm and then discounts them to their present values. Please see here for an Example DCF Valuation Model.