A DCF values the cash the business produces for all its investors, lenders and shareholders together, before any of it's paid out as interest. That's unlevered free cash flow (UFCF):
UFCF = EBIT x (1 - tax rate) + D&A - capital expenditures - increase in net working capital
- EBIT x (1 - tax rate) is NOPAT: operating profit after the tax the company would pay if it had no debt. Interest is left out on purpose, because the cost of debt goes into the discount rate (WACC) instead.
- D&A is added back because it reduced EBIT without using cash.
- Capital expenditures are the cash spent on equipment and buildings.
- An increase in net working capital (receivables plus inventory minus payables) ties up cash, so it's subtracted.
If you start from net income instead, add back interest after tax, interest x (1 - tax rate), then the same D&A, capex and working capital lines.