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DCF Model OBDC With Formulae

The document outlines the Discounted Cash Flow (DCF) model for OBDC, detailing the calculation of Free Cash Flows (FCF), the Weighted Average Cost of Capital (WACC), and the Terminal Value. Initial FCF is projected at $310.59 million with a revenue growth rate of 21.94% YoY, an operating margin of 76.34%, and a WACC estimated at 8-10%. Additionally, a terminal growth rate of 2-3% is assumed for long-term projections.

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14 views2 pages

DCF Model OBDC With Formulae

The document outlines the Discounted Cash Flow (DCF) model for OBDC, detailing the calculation of Free Cash Flows (FCF), the Weighted Average Cost of Capital (WACC), and the Terminal Value. Initial FCF is projected at $310.59 million with a revenue growth rate of 21.94% YoY, an operating margin of 76.34%, and a WACC estimated at 8-10%. Additionally, a terminal growth rate of 2-3% is assumed for long-term projections.

Uploaded by

rrewniezoryevsky
Copyright
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We take content rights seriously. If you suspect this is your content, claim it here.
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Discounted Cash Flow (DCF) Model for OBDC

1. Project Free Cash Flows (FCF):

FCF_t = Revenue_t * Operating Margin_t * (1 - Tax Rate) - CapEx_t + Depreciation_t - Change in Working

Capital_t

For OBDC, the initial FCF is $310.59 million. This FCF can be projected into the future using a growth rate (g).

2. Discount Rate (WACC):

WACC = (E/V) * r_e + (D/V) * r_d * (1 - T)

Where:

E = Market value of equity

D = Market value of debt

V = E + D (Total firm value)

r_e = Cost of equity (can be estimated using CAPM)

r_d = Cost of debt (interest rate on debt)

T = Corporate tax rate

3. Terminal Value:

TV = FCF_n * (1 + g) / (WACC - g)

Where:

FCF_n = Free Cash Flow in the final projected year

g = Perpetual growth rate beyond the projection period


Assumptions for OBDC:

- Revenue Growth Rate: Based on historical data, around 21.94% YoY.

- Operating Margin: Consistently high around 76.34%.

- WACC: Estimated at around 8-10%, considering the company's capital structure.

- Terminal Growth Rate: Assumed to be around 2-3%.

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