Calculating Free Cash Flow 5-10 years + Discount Rate?
Not a business student here and just trying to learn the DCF technique through online sources.
So my question is, how do I project free cash flow for 5-10 years out for a firm. The source that I have been looking at states that you must look at the firms free cash flow from the year before and then predict a growth rate that will allow you to calculate the free cash flow for the years after. However, how do you come up with a reasonable growth rate to use. Or is this even the correct way of doing it?
Once the cash flows are determined, how do you then calculate the discount rate to discount the cash flows to the present?
Oh and by the way I am using the free cash flow to equity model.
An example would be really helpful!
Thanks!
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