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DCF Sensitivity Calculator
Estimate how enterprise value changes with discount rate and terminal growth assumptions (simple 3x3 sensitivity).
Most DCFs are dominated by discount rate and terminal value assumptions. A sensitivity grid helps you see how fragile (or robust) your valuation is.
This calculator computes enterprise value at a 3x3 grid around your base discount rate and terminal growth assumptions.
Prefer an explanation- Read the guide.
DCF sensitivity guide: WACC, terminal growth, valuationValuation modeling hub: WACC, DCF, multiples, and equity valueARR valuation sensitivity: a simple multiple grid for scenariosDCF valuation: forecast cash flows, discount rate, and terminal value
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Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
$92,389,745.51
- Current annual free cash flow (FCF)
- $5,000,000
- Forecast years
- 5
- Forecast growth (annual)
- 15%
- Base discount rate
- 12%
- Discount rate step
- 2%
- Base terminal growth
- 3%
- Terminal growth step
- 1%
How to calculate
- Enter current annual free cash flow (FCF) and a simple forecast (years + growth).
- Enter base discount rate and terminal growth.
- Enter steps for discount rate and terminal growth to generate a 3x3 grid.
Formula
EV = sum (FCF_t/(1+r)^t) + (FCF_(n+1)/(r - g_terminal))/(1+r)^n; Sensitivity varies r and g_terminal
- Uses a simple constant growth forecast during the explicit period.
- Terminal value uses a perpetuity growth model.
- Only shows a small grid; use broader scenarios for full sensitivity analysis.
FAQ
Why do some grid points disappear-
Because the perpetuity model requires terminal growth to be less than the discount rate (r > g). When g is too high relative to r, the terminal value becomes mathematically invalid.
How should I pick the steps-
A common starting point is +/-1-3% for discount rate and +/-0.5-1% for terminal growth. If valuation changes wildly, you need more conservative assumptions and/or better forecasting detail.
Common mistakes
- Terminal growth >= discount rate (invalid in perpetuity model).
- Treating a single scenario as precise (false precision).
- Using accounting profit instead of free cash flow.
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Quick checks
- Use consistent time units (monthly vs annual) when entering rates and cash flows.
- Run a sensitivity check on the input that drives the result most (often discount rate or growth).
- Treat the output as a decision aid, not a prediction; validate assumptions with reality.