10-Year DCF Model with Monte Carlo Simulation (Excel XLSX)

BENEFITS OF THIS EXCEL DOCUMENT

1. DCF Model with Statistical Tools for Analysis and Valution
2. Introduces the powerful AI tool that Excel is capable of

MONTE CARLO EXCEL DESCRIPTION

This product (10-Year DCF Model with Monte Carlo Simulation) is an Excel template (XLSX) with a supplemental Excel document, which you can download immediately upon purchase.

This Discounted Cash Flow (DCF) model offers a comprehensive valuation, increasing the accuracy of your business's intrinsic valuation. It incorporates a statistical tool called Monte Carlo simulation. By running 5,000 simulations, the model provides an indication of where your business is valued across 5,000 possible scenarios.

To further support business analysis, the spreadsheet includes a scenario analysis feature that allows you to compare results alongside the simulations. Three simple scenarios are available: Base, Optimistic, and Pessimistic. In addition, the Monte Carlo results provide a 95% confidence interval, indicating the range within which the enterprise value (EV) is most likely to fall. This enables the user to compare the estimated EV against the true distribution generated from the 5,000 simulations.

This DCF model also includes a customized Weighted Average Cost of Capital (WACC) calculation, which is used as the discount rate in the valuation. The cost of equity within the WACC is derived using the Capital Asset Pricing Model (CAPM). Users can input their own assumptions, and the calculation will update automatically.

DKAW – Automations is a company built on efficiency and accuracy. In line with these values, the DCF spreadsheet includes both Enterprise Valuation (EV) approaches: the Terminal Value method and the Gordon Growth Perpetuity method. The average EV is then used as a benchmark against the simulation results. In my opinion, this is the most reliable way to ensure accuracy. However, with the automated features included, either method can be applied seamlessly.

The automated functionality extends further: the spreadsheet contains an input sheet where you can insert your business assumptions. Once entered, the entire model updates dynamically. Please note that the forecast horizon is 10 years, with the base year set to 2025.

In conclusion, this is an advanced version of the DCF model—designed to be both robust and flexible—allowing you to tailor it to your specific needs.

Source: Best Practices in Monte Carlo Excel: 10-Year DCF Model with Monte Carlo Simulation Excel (XLSX) Spreadsheet, DKAW - Finscience