Discounted cash flow valuation: free cashflow projection, terminal value, WACC and enterprise value.
A discounted cash flow (DCF) valuation values a company as the present value of its future free cash flows. This model projects free cash flow, adds a terminal value for the years beyond the forecast, discounts everything at the WACC and arrives at enterprise value.
The value of all cash flows after the explicit forecast period, usually from a growing perpetuity: FCF × (1 + g) / (WACC − g). It often makes up most of the total value.
The terminal value divides by WACC − g. When the two are close, small changes in either assumption change the valuation a lot.