FCFE Valuation Model — Free Cash Flow to Equity, 5-Year Forecast & Gordon Terminal Value

Financial Model, General Excel Financial Models

5-year Financial Projections, Business Valuation, DCF Model, Discount Rate, Excel, Free Cash Flows, NPV (Net Present Value), Sensitivity Analysis, Terminal Value, Valuation, WACC (Weighted Average Cost of Capital)

The FCFE Valuation Model values the equity of a business directly. Because free cash flow to equity is already after interest and after net borrowing, discounting it at the cost of equity gives you equity value straight out — there is no enterprise-value-to-equity bridge to get wrong. That is the whole point of the FCFE approach, and this model is built cleanly around it.

What it does: it forecasts five explicit years — a revenue build, EBITDA, and the P&L down to net income — then constructs the full FCFE bridge (net income + depreciation & amortisation − capital expenditure − increase in net working capital + net borrowing). It computes the cost of equity from CAPM (risk-free rate, beta, equity risk premium and a size/specific premium), discounts the explicit strip with an optional mid-year convention, and adds a Gordon-growth terminal value. The terminal-value share of total value is reported, so you can see immediately how much of your answer rests on a perpetuity assumption rather than the forecast.

Main features: a 5-year explicit forecast; a complete FCFE bridge; CAPM cost of equity; Gordon terminal value; a mid-year toggle; and a two-way sensitivity grid showing value per share across cost of equity and terminal growth. Eight built-in integrity checks must all read OK before you rely on the output, and where the cost of equity is at or below terminal growth the model returns “n/a” rather than a meaningless number.

Design note: net debt is driven off a target debt/revenue ratio and interest is charged on the average balance, so the workbook is completely free of circular references and opens and calculates first time in any version of Excel. 218 live formulas, zero formula errors.

Why you need it: it is fully unlocked, every formula visible, with an honest cover disclosing every convention. Currency-agnostic; treat $ as your currency. For analysis only, not investment advice.

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