This is a super easy question with a structure.
Do not include it for : business valuation with Discounted Cash Flow.
Include it for : any Net Profit Value calculation.
Formula Business Valuation
- Discounted Cash Flow Method: Business Value = Expect Annual Cash Flow / Annual Interest Rate
- Profit point of view: Expect Annual Cash Flow = Revenu - Cost
- Revenu point of view: Expect Annual Cash Flow = Revenu
- Cost = Fixed Cost + Variable Cost
Formula Net Profit Value
- Net Profit Value = Present Value - Investment Cost
- Present Value = Future Value/Discount Rate
- Future Value = Expect Annual Cash Flow
An Expect Annual Cash Flow is a cash flow you are going to get every year. The investment cost is a one-time investment so we are not considering it.
If it is helpful, upvote it ;)