Integrating ESG Factors into Discounted Cash Flow Valuation A Case Study of Microsoft
DOI:
https://doi.org/10.54691/5ggkb450Keywords:
ESG, Discounted Cash Flow, corporate valuation, Microsoft, enterprise value.Abstract
This study takes Microsoft as the research subject and explores how environmental, social, and governance (ESG) factors can be integrated into the traditional Discounted Cash Flow (DCF) valuation method. First, a traditional DCF model is established based on Microsoft's 2016 financial data. ESG-related expenses are then incorporated into earnings before interest and taxes (EBIT) for adjustment. The results show that after ESG-related expenses are incorporated into the traditional DCF model, the estimated value of the company decreases. This study develops a practical and transparent method for quantitatively integrating ESG factors into corporate valuation and demonstrates how sustainability-related investment may affect a company's long-term development.
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