Mostly, when I was starting myself, I would use FCFF. So WACC (Weighted Average Cost Per Capital) was my go to. I still use it primarily. WACC is the firm’s cost of capital where different categories of capital are weighted proportionately. Although it’s very reliable, I don’t blindly make my decisions based on it. My further calculation includes comparing WACC with banking sector deposit rates. Also, at times, I map sensitivity chart with various WACC and growth. This helps me better analyse and understand the case, which eventually helps me grandly in making right investments.
If you’re starting, my advice would be to go with WACC. And then you must continue learning new practices and methods to make your DCF valuation even more fool-proof.
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