# Finance Dcf

> Discounted Cash Flow — forecast, WACC, terminal value, sensitivity — with explicit assumptions, cross-check against multiples, and a valuation range.

- Skill: `quantumquirkxyz/finance-dcf` (Agent Skill)
- Install (CLI): `npx skillmds@latest add quantumquirkxyz/finance-dcf`
- Raw SKILL.md: https://api.skillmd.com/api/skills/quantumquirkxyz/finance-dcf/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: quantumquirkxyz (https://skillmd.com/u/quantumquirkxyz)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/quantumquirkxyz/finance-dcf

---


## Contract

- **Input:** problem description and inputs defined by the skill body.
- **Output:** Markdown artifact with completed process steps.
- **Side effects:** none.
- **Dependencies:** none.
- **Stop condition:** all process steps executed; artifact saved with required sections.
- **Risk:** low.
- **Boundary:** produces reasoning artifact only; no system changes.


# Discounted Cash Flow

Run a **DCF** — forecast FCF, choose WACC, compute terminal value — and deliver a valuation range with cross-checks and sensitivity.

## When to use

- The user wants a DCF valuation for a company, project, or asset.
- A corporate valuation needs a foundational DCF alongside multiples.
- A project finance decision depends on a DCF output.

## Process

### 1. Build the forecast

Produce explicit annual projections (typically 5–10 years):

- **Revenue growth** — justified by historicals, market size, pricing power.
- **EBITDA margin** — projected path with operating leverage reasoning.
- **Capex and D&A** — investment cycle and depreciation schedule.
- **Working capital** — as % of revenue with historical justification.
- **Tax rate** — effective vs statutory; deferred tax if relevant.
- **FCF** = EBIT(1−T) + D&A − Capex − ΔWC.

**Completion criterion:** FCF projection for each year; every line justified.

### 2. Choose WACC

Compute WACC:

- **Cost of equity:** CAPM with beta (levered, from comparables or fundamental), risk-free (sovereign yield), ERP.
- **Cost of debt:** pre-tax yield on debt, or risk-free + credit spread.
- **Capital structure:** market-value weights (not book); target vs current.
- **Tax shield:** WACC = Ke·E/V + Kd·D/V·(1−T).

State the source for beta, ERP, and risk-free rate.

**Completion criterion:** WACC computed; each component sourced.

### 3. Terminal value

- **Gordon growth:** TV = FCF_n(1+g)/(WACC−g); g tied to long-run nominal GDP / inflation.
- **Exit multiple:** TV = EBITDA_n × multiple; state the multiple and its justification.
- Report both; explain which you prefer and why.

**Completion criterion:** both TV methods computed; preferred method stated with justification.

### 4. Sensitivity and scenario analysis

Build a sensitivity table: WACC (rows) × terminal growth (cols). Also run:

- **Base / Bear / Bull** scenarios with explicit assumption differences.
- **Break-even:** what growth rate or margin makes NPV = 0?

**Completion criterion:** sensitivity table present; scenarios and break-even computed.

### 5. Cross-check

- Compare DCF to market price / EV: is there a premium or discount?
- Compare to **multiples** (EV/EBITDA, P/E) on the same forecast.
- Is the DCF sensitive to terminal value? If TV > 80% of EV, flag it.

**Completion criterion:** cross-check done; TV dominance flagged if >80%.

### 6. Deliver

Markdown artifact: forecast, WACC, terminal value, sensitivity, scenarios, cross-check, and **valuation range** with a note on reliability.

**Completion criterion:** range delivered; reliability and TV dominance flagged.