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Discounted Cash Flow (DCF) Analysis Levered


Microsoft Corporation

Microsoft Corporation (MSFT)

Technology

Free Cash Flow

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 77,849.0086,832.7793,579.6891,155.9796,570.63110,360.92125,844.55136,528.76148,120.05160,695.44174,338.48
Revenue (%)
Operating Cash Flow 28,835.2732,501.5129,664.7633,326.6239,507.0543,879.5052,187.7451,662.4856,048.6360,807.1665,969.68
Operating Cash Flow (%)
Capital Expenditure -4,258.34-5,487.83-5,942.31-8,340.77-8,131.25-11,632.04-13,930.99-11,181.71-12,131.03-13,160.96-14,278.32
Capital Expenditure (%)
Free Cash Flow 24,576.9327,013.6823,722.4524,985.8531,375.8032,247.4638,256.7440,480.7843,917.5947,646.2051,691.36

Weighted Average Cost Of Capital

Share price $ 136.33
Diluted Shares Outstanding 7,753.00
Cost of Debt
Tax Rate 10.18
After-tax Cost of Debt -0.46
Risk-Free Rate
Market Risk Premium
Cost of Equity 12.14
Total Debt 72,850.00
Total Equity 1,056,966.49
Total Capital 1,129,816.49
Debt Weighting 6.45
Equity Weighting 93.55
Wacc

Build Up Free Cash Flow

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 77,849.0086,832.7793,579.6891,155.9796,570.63110,360.92125,844.55136,528.76148,120.05160,695.44174,338.48
Operating Cash Flow 28,835.2732,501.5129,664.7633,326.6239,507.0543,879.5052,187.7451,662.4856,048.6360,807.1665,969.68
Capital Expenditure -4,258.34-5,487.83-5,942.31-8,340.77-8,131.25-11,632.04-13,930.99-11,181.71-12,131.03-13,160.96-14,278.32
Free Cash Flow 24,576.9327,013.6823,722.4524,985.8531,375.8032,247.4638,256.7440,480.7843,917.5947,646.2051,691.36
WACC
PV LFCF 29,085.2428,262.0527,462.1626,684.90
SUM PV LFCF 193,489.34

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 11.65
Free cash flow (t + 1) 53,868.12
Terminal Value 704,158.40
Present Value of Terminal Value 405,860.45

Intrinsic Value

Enterprise Value 602,897.80
Net Debt -60,973.10
Equity Value 663,870.90
Shares Outstanding 7,753.00
Equity Value Per Share 85.06

Results Levered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
13.65 (%) 62.40 Sell 65.08 Sell 68.21 Sell 71.92 Sell 76.41 Sell 81.94 Sell 88.91 Sell 97.97 Sell 110.25 Sell
13.15 (%) 60.72 Sell 63.15 Sell 65.99 Sell 69.33 Sell 73.33 Sell 78.21 Sell 84.28 Sell 92.05 Sell 102.35 Sell
12.65 (%) 59.16 Sell 61.39 Sell 63.96 Sell 66.98 Sell 70.56 Sell 74.89 Sell 80.22 Sell 86.94 Sell 95.69 Sell
12.15 (%) 57.72 Sell 59.76 Sell 62.11 Sell 64.84 Sell 68.07 Sell 71.93 Sell 76.63 Sell 82.49 Sell 89.99 Sell
11.65 (%) 56.39 Sell 58.27 Sell 60.41 Sell 62.90 Sell 65.81 Sell 69.27 Sell 73.44 Sell 78.58 Sell 85.06 Sell
11.15 (%) 55.16 Sell 56.88 Sell 58.85 Sell 61.11 Sell 63.75 Sell 66.86 Sell 70.59 Sell 75.12 Sell 80.78 Sell
10.65 (%) 54.01 Sell 55.60 Sell 57.41 Sell 59.48 Sell 61.87 Sell 64.68 Sell 68.02 Sell 72.05 Sell 77.01 Sell
10.15 (%) 52.94 Sell 54.41 Sell 56.07 Sell 57.97 Sell 60.16 Sell 62.70 Sell 65.71 Sell 69.30 Sell 73.68 Sell
9.65 (%) 51.95 Sell 53.31 Sell 54.84 Sell 56.58 Sell 58.58 Sell 60.90 Sell 63.61 Sell 66.83 Sell 70.72 Sell