1. Project Future Cash Flows: Estimate the future cash flows the business is expected to generate. This includes revenue, operating expenses, taxes, and changes in working capital and capital expenditures. 2. Determine the Discount Rate: Identify the appropriate discount rate, often the Weighted Average Cost of Capital (WACC), which reflects the riskiness of the cash flows. 3. Calculate the Present Value: Discount the projected future cash flows to their present value using the discount rate. 4. Sum the Present Values: Add up all the discounted cash flows to obtain the total value of the business or investment.