DCF Valuation Calculator
Estimate enterprise value using a simple DCF: forecast cash flows, apply a discount rate (often WACC), and add a terminal value.
A DCF (discounted cash flow) values a business by discounting expected future cash flows back to today and adding a terminal value for cash flows beyond the forecast period.
This calculator uses a simple constant growth forecast and either a perpetuity (terminal growth) terminal value.
Prefer an explanation- Read the guide.
DCF valuation: forecast cash flows, discount rate, and terminal valueDiscount rate: how to choose it for NPV and DCFValuation modeling hub: WACC, DCF, multiples, and equity valueDCF sensitivity: discount rate vs terminal growth (how to read it)
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Debt minus cash; used to estimate equity 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
- Net debt (optional)
- $0
- Forecast years
- 5
- Forecast growth (annual)
- 15%
- Discount rate (annual)
- 12%
- Terminal growth (annual)
- 3%
How to calculate
- Enter current annual free cash flow (FCF).
- Set forecast years and annual growth during the forecast period.
- Set a discount rate (often WACC as a proxy).
- Set terminal growth (must be lower than discount rate).
Formula
EV = sum (FCF_t / (1+r)^t) + (FCF_(n+1) / (r - g_terminal)) / (1+r)^n
- FCF grows at a constant rate during the forecast period.
- Terminal value uses a perpetuity growth model.
- Discount rate is constant and represents risk (e.g., WACC as a proxy).
FAQ
Why is terminal value often so large-
Because most businesses are assumed to operate beyond the explicit forecast period. If terminal dominates, run sensitivity tables (discount rate, terminal growth) and consider extending the forecast period or using more conservative assumptions.
Is enterprise value the same as equity value-
No. Enterprise value is value of the business operations. To get equity value you'd adjust for net debt (cash, debt) and other claims. This calculator focuses on EV.
Common mistakes
- Using terminal growth >= discount rate (blows up the terminal value).
- Using accounting profit instead of cash flow (working capital and capex matter).
- Over-weighting terminal value without checking sensitivity.
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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.