DCF WACC Beta Dinamic

DCF analysis uses forecasts of future free cash flows and discounts them using WACC to arrive at a present value estimate. There are several variations in assigning values ​​to cash flows and the discount rate in a DCF analysis. But while the calculations involved can be complex, the purpose of DCF analysis is to estimate how much money an investor would receive from an investment, adjusted for the time value of money.

​

Dynamic DCF WACC is used in situations where basic assumptions may vary over time. This model therefore takes into account different discount rates, which reflect the different risks and time profiles of the cash flows. Dynamic DCF WACC may be appropriate when there are expectations of significant changes in the company's capital structure, funding policy or financial risks over time. The DCF WACC methodology assumes a dynamic ratio of debt to equity during each of the forecast periods, based on the change in debt. This results in a different beta for each forecast period and therefore a different WACC.