In his 1938 text, The Theory of Investment Value, John Burr Williams made an extraordinary claim: he said that the intrinsic value of a business was simply the sum of of the future cash flows of the business discounted to the present. This idea, called Discounted Cash Flow (DCF), has become the foundation of modern valuation.
Most texts on DCF are written for a financial audience. This post attempts to introduce DCF to a reader from an engineering background via an IPython notebook. In doing so, we shall analyse one of the most fantastic businesses of our time, Visa Inc.
You can find the rendered IPython notebook here.