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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 };
}
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