In this workout we're asked to calculate the enterprise value i.e. find the discounted cash flow It then tells us to assume cash flows fall at the middle of each year I'm given a long term growth rate and a WACC, so I know I'll have to calculate my terminal value using the growing perpetuity method First of all, let's come up with our year count Well I know it's not going to be just a one, it's going to one minus 0.5 Because I know that I want this to the half year point My discount factor I can now calculate, that's one divided by one plus the WACC I'm going to lock that by putting dollar signs around it And now to the power of the year count and it's the half year point now And that comes out as 0.971 when I show three decimal places If I copy that to the right I get my three discount factors and we can now do some present valuing of the three cash flows So 50 multiplied by the discount factor gets me 48.6 Copy that to the right And I've now got my present value free cash flows The next thing we need to do is the terminal value and remember we're going to be using the growing perpetuity metho So I take my free cash flow and multiply that by one plus the growth rate All divided by the WACC minus the growth rate Which gets me a figure of 1,530 We now need to bring these altogether, so I'm going to sum up the present value of the free cash flows Giving me 150.8 And here's the slightly tricky one, I now need to present value the terminal value Well because we used the growing perpetuity method to get to the terminal value, I'm going to discount this Using the year 2.5 discount factor, 0.864 There's my present value of terminal value, if I sum up the two cells above Then that now get's me my enterprise value 1,473.4