Estimate Future Cash Flows: Project the business's future cash flows over a specific period, usually 5-10 years. Determine the Discount Rate: The discount rate reflects the required rate of return and is often based on the Weighted Average Cost of Capital (WACC) or the cost of equity. Calculate the Present Value: Discount the estimated future cash flows to their present value using the formula: PV = CF / (1 + r)^n where PV is the present value, CF is the cash flow, r is the discount rate, and n is the period. Sum the Present Values: Add the present values of all projected cash flows to obtain the total DCF.