The Present Value Interest Factor of an Annuity function, PVIF (k, n) is used to discount future amounts to their present value. The equation inside the function is: PVIF (k, n) = 1 / (1+k) n Where k is the discount rate, in this case WACC, and n is the number of periods of discounting. This discount factor is multiplied times an FCF forecast to get the present value.

Suppose Sally Co has a WACC of 15%. Find the present value of the future FCFs and terminal value and sum them to get the DCF value of Sally Co. Please compute each years PVIF (15%, i) to four decimal places. Then sum up the present values of the cash flows to get Sally Cos DCF Value. Year i FCFi PVIF (15%, i) PVIF (15%, i) x FCFi 1 $12M 2 $15M 3 $18M 4 $22M 5 $26M 6 Terminal Year $260M DCF Value =

Year i	FCFi	PVIF (15%, i)	PVIF (15%, i) x FCFi
1	$12M
2	$15M
3	$18M
4	$22M
5	$26M
6 Terminal Year	$260M
		DCF Value =