DCF Valuation Calculator
Value a business from its cash generation: project the flows, add a terminal value, and discount the lot back to today.
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How it works
A discounted cash flow valuation projects free cash flow for an explicit forecast period, then adds a terminal value representing everything beyond it. Both are discounted at the weighted average cost of capital to give an enterprise value.
The terminal value routinely accounts for two thirds or more of the total, which is the model’s central weakness. It rests on a perpetual growth rate that must stay below the discount rate — and small changes to either input move the valuation enormously. Treat the output as a range, never a number.
EV = Σ FCFₜ ÷ (1 + WACC)ᵗ + [FCFₙ × (1 + g) ÷ (WACC − g)] ÷ (1 + WACC)ⁿ
- FCF — free cash flow — operating cash less capital expenditure
- WACC — weighted average cost of capital, the discount rate
- g — perpetual growth rate beyond the forecast, which must be below WACC
Worked example
18,000,000 of free cash flow growing 12% for five years, 11% WACC, 3% terminal growth
Inputs
Results
Nearly three quarters of the valuation sits in the terminal value. Moving terminal growth from 3% to 4% adds roughly 15% to the total.
Frequently asked questions
What terminal growth rate is defensible?
Below long-run economic growth — typically 2–3%. Anything higher implies the business eventually becomes larger than the economy. The rate must also stay below WACC, or the formula breaks entirely.
Why is so much value in the terminal figure?
Because a five-year forecast captures only a small part of a going concern’s life. It is the model’s biggest weakness, and the reason a DCF should always be run across a range of assumptions rather than reported as a single number.
Is this enterprise value or equity value?
Enterprise value. Subtract net debt to reach equity value, then divide by shares outstanding for a per-share figure.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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