feat: add client-side computeDcf utility

1 files changed, 52 insertions, 0 deletions

diff --git a/frontend/lib/dcf.ts b/frontend/lib/dcf.ts
new file mode 100644
index 0000000..04f1d6c
--- /dev/null
+++ b/frontend/lib/dcf.ts
@@ -0,0 +1,52 @@
+export type DcfInputs = {
+  baseFcf: number;
+  /** enterprise_value - equity_value; holds net_debt + preferred + minority interest */
+  equityBridge: number;
+  sharesOutstanding: number;
+};
+
+export type DcfParams = {
+  wacc: number;
+  terminalGrowth: number;
+  projectionYears: number;
+  growthRate: number;
+};
+
+export type DcfComputed = {
+  intrinsicValuePerShare: number;
+  enterpriseValue: number;
+  equityValue: number;
+  fcfPvSum: number;
+  terminalValuePv: number;
+};
+
+export function computeDcf(
+  inputs: DcfInputs,
+  params: DcfParams
+): DcfComputed | { error: string } {
+  const { baseFcf, equityBridge, sharesOutstanding } = inputs;
+  const { wacc, terminalGrowth, projectionYears, growthRate } = params;
+
+  if (wacc <= 0) return { error: "WACC must be greater than 0%." };
+  if (terminalGrowth >= wacc) return { error: "Terminal growth must be lower than WACC." };
+  if (baseFcf <= 0) return { error: "DCF not meaningful with zero or negative base FCF." };
+
+  const projected = Array.from(
+    { length: projectionYears },
+    (_, i) => baseFcf * (1 + growthRate) ** (i + 1)
+  );
+  const fcfPvSum = projected.reduce(
+    (sum, fcf, i) => sum + fcf / (1 + wacc) ** (i + 1),
+    0
+  );
+
+  const terminalFcf = projected[projected.length - 1] * (1 + terminalGrowth);
+  const terminalValue = terminalFcf / (wacc - terminalGrowth);
+  const terminalValuePv = terminalValue / (1 + wacc) ** projectionYears;
+
+  const enterpriseValue = fcfPvSum + terminalValuePv;
+  const equityValue = enterpriseValue - equityBridge;
+  const intrinsicValuePerShare = equityValue / sharesOutstanding;
+
+  return { intrinsicValuePerShare, enterpriseValue, equityValue, fcfPvSum, terminalValuePv };
+}