Microsoft Corporation (MSFT) Discounted Free Cash Flow - Perpetuity - Discounting Cash Flows
MSFT
Microsoft Corporation
MSFT (NASDAQ)

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Free Cash Flow Model

Discounted Free Cash Flow calculates the value of a share based on the company's estimated future Free Cash Flow figures.

See our GitHub Model Documentation

Interactive Assumptions

Discount Rate

Discount Rate

Discount Rate = Equity Weight * Cost of Equity + Debt Weight * Cost of Debt * (1 - Tax Rate)

Calculated using Weighted Average Cost of Capital (WACC) formula. It represents a firm’s average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt.

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Cost of Equity

Cost of Equity = Risk Free Rate + Beta * Market Premium

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

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Cost of Debt

Cost of Debt = Interest Expense / Total Debt

The cost of debt is the effective rate that a company pays on its debt, such as bonds and loans.

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Equity & Debt Weights

Debt Weight = Total Debt / (Market Capitalization + Total Debt) = 1 - Equity Weight

The Equity Weight represents the proportion of equity-based financing (Market Capitalization), while the Debt Weight represents the proportion of debt-based financing (Total Debt).


Tax Rate

Tax Rate = Income Tax Expense / Income Before Tax

The overall tax rate paid by the company on its earned income.

↳ Beta

Beta

Beta measures the volatility of a stock's price in relation to the overall stock market. A higher beta indicates greater price fluctuations relative to the market.

↳ Risk Free Rate

Risk-Free Rate

The risk-free rate represents the return an investor expects from an absolutely risk-free investment over a specified time period. By default, it is set to the current yield of the U.S. 10-Year Treasury Bond.

↳ Market Premium

Market Premium

The market risk premium represents the additional return over the risk-free rate that investors expect for taking on the risks associated with equities.

Growth In Perpetuity

Growth in Perpetuity

The rate at which the company's free cash flow is assumed to grow indefinitely. By default, this rate equals the yield of the U.S. 10-Year Treasury Bond.

Historical Years

Historical Years

The number of years of historical data used to calculate averages and trends for analysis.

Projection Years

Projection Years

The number of years into the future for which the analysis projects financial performance and metrics.

Revenue Growth Rate

Revenue Growth Rate

The annual growth rate applied to projected revenue, starting from the second projection year onward.

Operating Cash Flow Margin

Operating Cash Flow Margin

Projected Operating Cash Flow = Projected Revenue * Operating Cash Flow Margin

This margin represents the percentage of revenue used to estimate future Operating Cash Flow.

Capital Expenditure Margin

Capital Expenditure Margin

Projected Free Cash Flow = Projected Operating Cash Flow - Projected Revenue * Capital Expenditure Margin

This margin is used to estimate future capital expenditures as a percentage of revenue, which in turn is subtracted from Operating Cash Flow to calculate Free Cash Flow.

Results

Terminal Value 2,652 Bil. USD
Discounted Terminal Value 1,751 Bil. USD
Sum of Discounted Free Cash Flow 380.8 Bil. USD
Enterprise Value 2,132 Bil. USD
Cash and Equivalents 28.83 Bil. USD
Total Debt 60.57 Bil. USD
Equity Value 2,151 Bil. USD
Shares Outstanding 7.43 Bil. USD
Estimated Value per Share 289.3 USD
Yield of the U.S. 10 Year Treasury Note 4.3%
Average Cash from Operating Activities Margin 41.95%
Average Capital Expenditure Margin 12.25%
Cost of Equity 8.74%
Equity Weight 98.37%
Cost of Debt 4.08%
Debt Weight 1.63%
Tax Rate 18.29%

Monetary values are in USD

Edit Chart Values 2025 2026 2027 2028 2029

amounts of USD except for #

2024 2025 2026 2027 2028 2029
Revenue 245,122 245,327 272,362 302,376 335,698 372,692
Revenue Growth Rate 15.67% 0.084% 11.02% 11.02% 11.02% 11.02%
Operating Cash Flow 118,548 102,915 114,256 126,847 140,825 156,344
Operating Cash Flow Margin 48.36% 41.95% 41.95% 41.95% 41.95% 41.95%
Capital Expenditure -44,477 -30,053 -33,364 -37,041 -41,123 -45,655
Capital Expenditure Margin -18.14% -12.25% -12.25% -12.25% -12.25% -12.25%
Free Cash Flow 74,071 72,862 80,892 89,806 99,702 110,690
Free Cash Flow Margin 30.22% 29.7% 29.7% 29.7% 29.7% 29.7%
Compounded Discount Rate
0% 8.55% 17.95% 28.19% 39.28%
Discounted Free Cash Flow 74,071 72,862 74,516 76,139 77,779 79,473

amounts of USD except for #

Average LTM 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Revenue 159,448 270,010 245,122 211,915 198,270 168,088 143,015 125,843 110,360 96,571 91,154 93,580
Revenue Growth Rate 11.02% 10.15% 15.67% 6.88% 17.96% 17.53% 13.65% 14.03% 14.28% 5.94% -2.59% 7.77%
Cost of Revenue 51,435 83,501 74,114 65,863 62,650 52,232 46,078 42,910 38,353 34,261 32,780 33,038
Gross Profit 108,013 186,509 171,008 146,052 135,620 115,856 96,937 82,933 72,007 62,310 58,374 60,542
Gross Margin 67.02% 69.07% 69.76% 68.92% 68.4% 68.93% 67.78% 65.9% 65.25% 64.52% 64.04% 64.7%
Operating Income 61,602 122,130 109,433 88,523 83,383 69,916 52,959 42,959 35,058 29,025 26,078 18,161
Operating Margin 36.03% 45.23% 44.64% 41.77% 42.06% 41.59% 37.03% 34.14% 31.77% 30.06% 28.61% 19.41%
Net Income 49,950 96,635 88,136 72,361 72,738 61,271 44,281 39,240 16,571 25,489 20,539 12,193
Net Margin 28.92% 35.79% 35.96% 34.15% 36.69% 36.45% 30.96% 31.18% 15.02% 26.39% 22.53% 13.03%
Cash from Operating Activities 69,260 130,710 118,548 87,582 89,035 76,740 60,675 52,185 43,884 39,507 33,325 29,668
Cash from Operating Activities Margin 41.95% 48.41% 48.36% 41.33% 44.91% 45.65% 42.43% 41.47% 39.76% 40.91% 36.56% 31.7%
Capital Expenditure -21,986 -61,345 -44,477 -28,107 -23,886 -20,622 -15,441 -13,925 -11,632 -8,129 -8,343 -5,944
Free Cash Flow 47,273 69,365 74,071 59,475 65,149 56,118 45,234 38,260 32,252 31,378 24,982 23,724
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Discounting Cash Flows

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