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Discounted Cash Flow Calculator

Estimate enterprise value by discounting forecast free cash flow and a terminal value.

DCF Inputs

Keep this below the discount rate.

Results computed instantly — your data never leaves your device.

DCF Results

Real-Time

Estimated enterprise value

$1,446,211.89

Present value of forecast

$435,812.08

Present value of terminal value

$1,010,399.81

Terminal value

$1,627,258.99

Final forecast-year cash flow: $127,628.16.

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How to Use the Discounted Cash Flow Calculator

  1. 1

    Enter current annual free cash flow.

  2. 2

    Set the forecast growth, discount rate, terminal growth rate, and forecast years.

  3. 3

    Keep terminal growth below the discount rate so the Gordon growth value remains finite.

  4. 4

    Review the forecast value, terminal value, and combined enterprise value estimate.

Formula & Mathematical Basis

Enterprise value = Σ[FCFₜ ÷ (1 + r)ᵗ] + [FCFₙ(1 + gₜ) ÷ (r − gₜ)] ÷ (1 + r)ⁿ

Variable Key

FCFₜ

Free cash flow in forecast year t

r

Discount rate or WACC as a decimal

gₜ

Perpetual terminal growth rate as a decimal

n

Number of explicit forecast years

📝 This simplified DCF uses a constant growth rate during the explicit forecast and a Gordon growth terminal value. It is an educational estimate, not an investment recommendation or a complete valuation model.

Step-by-Step Examples

1

Five-year DCF illustration

Scenario: Start with $100,000 of annual free cash flow, 5% forecast growth, a 10% discount rate, 2% terminal growth, and five forecast years.

  1. 1.Project each year’s cash flow by multiplying the previous year by 1.05.
  2. 2.Discount each projected cash flow by the corresponding power of 1.10.
  3. 3.Calculate terminal value from the final forecast cash flow and the 2% perpetual rate.
  4. 4.Discount terminal value back five years and add it to the forecast present value.
✅ The calculator reports an enterprise-value estimate whose sensitivity is driven strongly by the discount and terminal growth assumptions.

Practical Use Cases

  • Build a transparent first-pass valuation for a business or project.
  • Compare how discount-rate assumptions change present value.
  • Explain why terminal value should be stress-tested rather than treated as a precise price.

Common Pitfalls

  • Using a terminal growth rate equal to or above the discount rate.
  • Mixing levered equity cash flow with an enterprise discount rate.
  • Treating a single DCF output as a market price or certainty.

Frequently Asked Questions

What does DCF estimate?

It estimates present value from projected cash flows and a terminal value under the assumptions entered.

Why does the discount rate matter so much?

Future cash flows are divided by larger powers of the discount factor, so higher rates reduce present value, especially for distant cash flows.

Can I use revenue instead of free cash flow?

Not without changing the model. Revenue is not cash available to investors; this route is designed around free cash flow.

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