MSFT — Valuation Models

Interactive models with editable assumptions. All calculations run client-side.

Valuation Summary

Model	Intrinsic Value	vs Price ($396.86)
DCF	$2408.04	+506.8%
Graham Number	$137.58	-65.3%
Reverse DCF	—	implied g: 25.1%
DDM	$74.98	-81.1%
EV/EBITDA	$396.87	+0.0%

Values reflect default assumptions. Adjust inputs in each model below to update.

1 — Discounted Cash Flow (DCF)

Assumptions

Base FCF($B)Yahoo: $53.64B

Near-term growth (yrs 1–5)(%)Rev: 16.7% / EPS: 59.8%

Long-term growth (yrs 6–10)(%)

Terminal growth rate(%)

WACC(%)Computed: 9.85%

Computed WACC: 9.85%

Cost of equity (Re)10.26%(Rf 4.30% + β 1.08 × ERP 5.50%)

Cost of debt (Rd)0.00%(no debt / unavailable → 0%)

Tax rate (T)21.00%(US statutory fallback)

Equity weight (E/V)95.99%

Debt weight (D/V)4.01%

Results

Intrinsic Value / share$2040.48

Current Price$396.86

Upside / Downside+414.2%

Net Debt (used)$33.82B

Sensitivity: WACC (rows) × Near-term g (cols)

WACC \ Near-term	51.8%	55.8%	59.8%	63.8%	67.8%
7.0%	$2990.83	$3402.39	$3858.18	$4361.68	$4916.55
8.0%	$2323.43	$2642.39	$2995.59	$3385.70	$3815.55
9.0%	$1868.78	$2124.70	$2408.04	$2720.94	$3065.67
10.0%	$1541.25	$1751.78	$1984.81	$2242.13	$2525.58
11.0%	$1295.55	$1472.04	$1667.37	$1883.01	$2120.51

2 — Graham Number

Assumptions

MultiplierGraham used 22.5 (15× P/E × 1.5× P/B)

EPS (trailing)($)Yahoo: $15.99

Book Value / share($)Yahoo: $52.62

Results

Graham Number$137.58

Current Price$396.86

Margin of Safety-65.3%

Formula: √(22.5 × max(0,EPS) × max(0,BVPS))

3 — Reverse DCF (Implied Growth)

Assumptions

WACC(%)Computed: 9.85%

Terminal growth rate(%)

Computed WACC: 9.85%

Cost of equity (Re)10.26%(Rf 4.30% + β 1.08 × ERP 5.50%)

Cost of debt (Rd)0.00%(no debt / unavailable → 0%)

Tax rate (T)21.00%(US statutory fallback)

Equity weight (E/V)95.99%

Debt weight (D/V)4.01%

Results

Current Price$396.86

Implied Near-term FCF Growth27.8%

Historical Revenue Growth16.7%

Historical Earnings Growth59.8%

Base FCF (TTM)$53.64B

Implied growth is the FCF growth rate (yrs 1–5) that makes the DCF intrinsic value equal the current price. Long-term growth is set to half the implied near-term rate.

4 — Dividend Discount Model (DDM)

Assumptions

Annual dividend D0($/share)Yahoo: $3.64

Dividend growth rate (g)(%)

Required return (r)(%)

Results

DDM Intrinsic Value / share$74.98

Current Price$396.86

Upside / Downside-81.1%

Formula: D0 × (1+g) / (r − g)

5 — EV/EBITDA Multiple

Assumptions

EBITDA($B)Yahoo: $175.26B

Target EV/EBITDA multipleCurrent: 17.0×

Net Debt($B)Default: $33.82B

Results

Implied Equity Value / share$396.87

Current Price$396.86

Upside / Downside+0.0%

Implied EV$2.98T

Sensitivity: EV/EBITDA multiple (rows) × Net Debt (cols)

Mult \ Net Debt	$17.82B	$25.82B	$33.82B	$41.82B	$49.82B
13.0x	$304.61	$303.54	$302.46	$301.38	$300.30
15.0x	$351.82	$350.74	$349.66	$348.59	$347.51
17.0x	$399.02	$397.94	$396.87	$395.79	$394.71
19.0x	$446.23	$445.15	$444.07	$442.99	$441.92
21.0x	$493.43	$492.35	$491.27	$490.20	$489.12

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