The next step is pretty easy. Don't try to be a hero. You have to pick a tax rate.

Get some good industry level data. See what the average tax is. That the

company you're valuing has paid over the past five years or so. See what ways

that tax rate has been trending. Has it been trending up? Has it been trending

down? Understand what is driving the change in that tax rate. Pick a tax rate.

Run it out. You're one to your 10. I'm Dylan Lewis and that was Motley Full

Analyst John Ratanti. Today we're continuing John series on navigating major

financial statements with a breakdown of how to build and understand a DCF or

discounted cash flow model. I'll confess that I've built exactly one DCF in my

entire life. It was for a college finance class and honestly I may never make

another one. Even if you're like me this conversation is for you because

throughout John's overview of modeling cash flows he provides mental models and

the questions you need to ask yourself when you're looking at companies.

Understanding how those inputs affect a company's path forward will make you a

better investor even if you never open and excel spreadsheet. Before I turn

things over to John we also want to know what investing questions you have. Give

us a call at 703-254-1445 and leave us a voicemail with your name, city and

whatever question you may have. He may answer it on an upcoming show. That number

is 703-254-1445 and now here's Professor John Ratanti.

Hello fools. John Ratanti again and today we are going to talk about valuation

in in particular a discounted cash flow valuation also called a DCF for

discounted cash flow. So the first thing we need to understand is the the

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