This workout asks us to calculate the enterprise value So what have we got? Well we've got a terminal value EBITDA multiple So in order to calculate my terminal value, I'll have to find EBITDA multiplied by 7 We've then got a WACC of 7% which I can use for discounting And then you've years EBITDA and free cash flows Let's start by calculating our discount factor , so remember the formula for that is one divided by one plus your WACC I'm going to lock that by putting dollar signs around it and that is to the power of the year you are in So that gives me a discount factor of 0.935 and I've shown three decimal places there To find my present value then, I take the free cash flow and multiply it by the discount factor i.e I only want 93.5% of it So my present value, it wasn't 50 at all, it's 50 in a year's time. It's now only 46.7 If I copy those both to the right What I now get is my present values in year 1, 2 and 3 But hang on, we haven't got our terminal value yet My terminal value is taken by taking the multiple of 7 and multiplying that by the EBITDA in year 3 I.e my last year of detailed cash flows So terminal value 980. I now want to find the present value of my free cash flows or the sum of my present value of my free cash flows And that comes to 143.7 But I still haven't present valued the terminal value yet, so I take that 980 and I multiply it by the year 3 discount factor 800 My enterprise value is now the sum of the two items above So I've got the present value of years 1, 2, 3 and I've got the present value of my terminal value Representing years 4 and onwards And that gives me an enterprise value of 943.7