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Finance / July 19, 2018 / Emmalynn Leach

The enterprise value (EV) of the business is calculated by discounting the unlevered free cash flows (UFCFs) projected over the projection period and the terminal value calculated at the end of the projection period to their present values using the chosen discount rate (WACC).

Free cash flow represents the cash a company can generate after required investment to maintain or expand its asset base. It is a measurement of a company's financial performance and health. There are two other types of free cash flow: free cash flow for the firm and free cash flow to equity. This article focuses on the more simplified free cash flow also known as levered free cash flow.

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