We take the discount rate and the long term free cash-flow. Value of the firm, at this point, is the total value of these discounted cash-flows.
Facebook’s WACC helps to evaluate the present value of its future cash-flows. The riskier the firm , the less you will value the future cash-flows probably because its very uncertain.
A reminder:
The derivation of free cash-flow from revenue and cost projections is rule based. The hard part is to make the required assumptions about the future. Bloomberg seems not to provide the estimation of long-term future cash-flows. Historical and current free cash-flow of a company can be found by using the FA function.
Question: What does uncertainty in the valuation of future cash-flows mean? Does it imply that the field, in which the company is operating, is dynamic?