Course 404: Putting DCF into Action  
Step 3Discount Projected Free Cash Flows to Present  

The next step is to discount each of the individual year's cash flows to express them in terms of today's dollars. Remember we are using the following formula, and the "discount factor" just represents the denominator in the equation. We can then multiply each year's cash flow by the discount factor to get the present value of each cash flow. Present Value of Cash Flow in Year N = CF = Cash Flow Last Year: $500.00 We then add up all the discounted cash flows from Years 1 through 10, and come up with a value of $5,870 million ($5.87 billion). 
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