Explicit Moving Averages

# ----------------------------------------- # DCF Plot for GOOGL Stock – Modified Example in R # Adjusted parameters to see variation in discounted FCFs # Parameters (in billions of USD) fcf0 <- 75 # Current Free Cash Flow g <- 0.12 # Adjusted Annual Growth Rate (12%) r <- 0.10 # Discount Rate (10%) terminalMultiple <- 15 # Terminal FCF Multiple MOS <- 0.20 # 20% Margin of Safety # Choose the forecast horizon (set T = 10 for a 10-year forecast) T <- 10 # ------------------------------- # Step 1: Calculate Projected and Discounted FCFs for Each Year # ------------------------------- years <- 1:T # Projected free cash flows for each year with 12% growth projected_fcf <- fcf0 * (1 + g)^years # Discount factors for each year discount_factors <- (1 + r)^years # Discounted FCF: now these will vary because g != r discounted_fcf <- projected_fcf / discount_factors # ------------------------------- # Step 2: Calculate Terminal Value at the End of Forecast # ------------------------------- # Projected FCF in the final forecast year final_year_fcf <- projected_fcf[T] # Terminal value using the terminal multiple terminal_value <- final_year_fcf * terminalMultiple # Discount the terminal value back to the present PV_terminal <- terminal_value / ((1 + r)^T) # ------------------------------- # Step 3: Plot the Results # ------------------------------- plot(years, discounted_fcf, type = "b", pch = 19, col = "blue", lwd = 2, xlab = "Year", ylab = "Value (Billion USD)", main = "DCF Analysis for GOOGL: Discounted FCF & Terminal Value") # Add the discounted Terminal Value as a red point at the final forecast year points(T, PV_terminal, col = "red", pch = 19, cex = 1.5) text(T, PV_terminal, labels = paste("PV(TV) =", round(PV_terminal, 2)), pos = 3, col = "red", cex = 0.8) # Optionally, add a legend to the plot legend("topleft", legend = c("Discounted Annual FCF", "Discounted Terminal Value"), col = c("blue", "red"), pch = c(19, 19), lty = c(1, NA), bty = "n")