Discounted Cash Flow Approach
The intrinsic value of Apple Inc. is estimated using a Free Cash Flow to the Firm (FCFF) Discounted Cash Flow (DCF) model. The DCF approach values the company based on the present value of its expected future operating cash flows, discounted at the Weighted Average Cost of Capital (WACC), which reflects the opportunity cost of both equity and debt holders.
Forecast Horizon
Financial projections are constructed over a five-year explicit forecast period (2024–2028), based on revenue growth, operating margin evolution, capital expenditures, depreciation, and working capital requirements. These forecasts are derived from historical performance, industry trends, and forward-looking assumptions
Free Cash Flow to the Firm (FCFF)
FCFF is calculated as:
EBIT × (1 − Tax Rate)
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Depreciation
− Capital Expenditures
− Change in Net Working Capital
This represents the cash flow available to all capital providers before financing decisions
Discount Rate (WACC)
Cash flows are discounted using Apple’s Weighted Average Cost of Capital, estimated using:
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Cost of Equity from the CAPM (Risk-free rate, beta, equity risk premium)
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After-tax Cost of Debt
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Target capital structure weights
The base-case WACC applied in the valuation is approximately 9.7%