# GOOG – DCF (2026-11-10)

Sample run by the Fair Value Coordinator. Method: 5-year explicit FCF forecast + Gordon growth terminal value, cross-checked with the implied terminal FCF multiple.

## Inputs
- Risk-free (10Y UST, 2026-11-10): 4.98%; ERP 5.0%; beta (5Y observed) 1.23 -> cost of equity 11.13%
- Cost of debt: 10Y + 1.0% spread (coordinator assumption), 21% tax -> 4.72% after tax; weights at market cap $3,520.00B / total debt $150.33B -> **WACC 10.87%**
- Normalized FCF = TTM operating cash flow ($179.55B) minus D&A as a maintenance-capex proxy ($28.54B) = $151.01B. Reported TTM FCF is $19.75B and FY1 consensus FCF is $-18.42B because of AI/data-center growth capex, so an unadjusted FCF DCF would give a meaningless value. LOW CONFIDENCE.
- Growth path (FCF grows with revenue, constant FCF margin): years 2-3 at consensus 3Y revenue CAGR 24.6%, then fades linearly to terminal g by year 5
- Net cash (debt): $114.77B; shares 12,354M (market cap / price; basic, not fully diluted)
- Scenarios: bear = 90% of year-1 FCF, half the growth rate, g 2.0%; base = as above, g 2.5%; bull = 110% of year-1 FCF, 1.25x growth, g 3.0%; all at base WACC

## Result (per share, vs close $284.92)
| Bear | Base | Bull |
|---|---|---|
| $168.24 | **$254.53** | $334.54 |

Base-case year 1-5 FCF ($B): 151.0, 188.1, 234.3, 274.7, 301.7. Terminal value is 73% of EV; implied terminal multiple 12.2x year-5 FCF (exit-multiple cross-check).

## Sensitivity (base case, $/share)
| WACC \ g | 2.0% | 2.5% | 3.0% |
|---|---|---|---|
| 9.87% | $274.68 | $290.10 | $307.78 |
| 10.87% | $242.81 | $254.53 | $267.75 |
| 11.87% | $217.45 | $226.61 | $236.80 |

Sources: see data/2026-11-10/GOOG.md