A Discounted Cash Flow (DCF) model is a valuation method used to estimate the current value of an asset today based on its future cash flows.

The second step in a DCF model is calculating the Weighted Average Cost of Capital (WACC), which serves as the discount rate to bring future cash flows back to the present.

The final step in a DCF model is to calculate the enterprise value, equity value, and implied share price to arrive at a valuation.

The first key step in creating a DCF model is forecasting free cash flows, typically for a five to ten year period.