Discounted Cash Flow Calculator (DCF)

Discounted Cash Flow Calculator (DCF)

Free online discounted cash flow calculator to estimate business or project value from projected cash flow, growth assumptions, discount rate, and terminal growth rate. This calculator is useful for investors, finance students, analysts, founders, buyers, and anyone who wants to turn future cash flow expectations into a present-day valuation. A DCF model works by forecasting future cash flows, discounting them back to today, and adding a terminal value that captures the value beyond the explicit forecast period. This page gives a practical way to see how rate assumptions and growth assumptions change estimated value.

This calculator uses five inputs. Year 1 cash flow means the cash flow expected in the first projected year. Cash flow growth rate means the yearly growth assumption applied to projected cash flow across the forecast period. Discount rate means the required rate of return used to convert future cash flows into present value. Forecast years means the number of years included in the explicit projection period. Terminal growth rate means the long-run growth assumption used after the forecast period ends. Once those values are entered, the calculator shows DCF enterprise value, present value of forecast cash flows, terminal value, present value of terminal value, and terminal value share of enterprise value.

The formula of discounted cash flow

Cash flow in year n = Year 1 cash flow x (1 + Growth rate) ^ (n – 1)

Present value of each year cash flow = Cash flow in year n / (1 + Discount rate) ^ n

Terminal value = Next year cash flow / (Discount rate – Terminal growth rate)

Present value of terminal value = Terminal value / (1 + Discount rate) ^ Forecast years

DCF enterprise value = Present value of forecast cash flows + Present value of terminal value

Here year 1 cash flow means the first projected annual cash flow, growth rate means the annual cash flow growth assumption during the forecast period, discount rate means the required return or weighted average cost of capital used in the valuation, terminal growth rate means the perpetual growth assumption after the explicit projection period, terminal value means the value of all cash flows beyond the forecast horizon, and DCF enterprise value means the total present value from both the explicit forecast period and the terminal period.

Solved Example

Example 1: Find the DCF value if year 1 cash flow is $100,000, growth rate is 6%, discount rate is 10%, forecast years are 5, and terminal growth rate is 3%.

Solve: Year 1 PV = 100000 / 1.10 = $90,909.09

Year 2 cash flow = 100000 x 1.06 = $106,000 and its PV = 106000 / (1.10 ^ 2) = $87,603.31

Year 3 cash flow = $112,360, Year 4 cash flow = $119,101.60, and Year 5 cash flow = $126,247.70

Present value of forecast cash flows = $422,668.01

Next year cash flow after year 5 = 126247.70 x 1.03 = $130,035.13

Terminal value = 130035.13 / (0.10 – 0.03) = $1,857,644.67

Present value of terminal value = 1857644.67 / (1.10 ^ 5) = $1,153,451.19

DCF enterprise value = 422668.01 + 1153451.19 = $1,576,119.20

Example 2: Find the result if year 1 cash flow is $50,000, growth rate is 4%, discount rate is 9%, forecast years are 4, and terminal growth rate is 2%.

Solve: Present value of forecast cash flows = $171,242.70

Terminal value = $819,543.77

Present value of terminal value = $580,585.47

DCF enterprise value = $751,828.17

Example 3: Find the result if year 1 cash flow is $200,000, growth rate is 8%, discount rate is 12%, forecast years are 5, and terminal growth rate is 3%.

Solve: Present value of forecast cash flows = $831,318.95

Terminal value = $3,114,008.06

Present value of terminal value = $1,766,971.80

DCF enterprise value = $2,598,290.75

Table of discounted cash flow calculator

How to use this discounted cash flow calculator

Enter the year 1 cash flow in the proper input field. After that, enter the forecast cash flow growth rate, the discount rate, the number of forecast years, and the terminal growth rate. Then click the calculate button. The calculator will show DCF enterprise value, present value of forecast cash flows, terminal value, present value of terminal value, and terminal value share of enterprise value in the answer box.

This calculator is useful for business valuation, investment screening, acquisition review, startup analysis, project selection, and finance learning. The present value of forecast cash flows shows how much value comes from the years you model directly. The present value of terminal value shows how much value comes from the long-run period beyond the explicit forecast. Looking at terminal value share of enterprise value is especially helpful because many DCF models rely heavily on terminal assumptions, and users often underestimate how much of the final valuation comes from that last piece.

When using the result, remember that DCF output depends heavily on assumptions. Small changes in discount rate, cash flow growth, or terminal growth can produce large changes in value. A terminal growth rate should normally stay below the discount rate, or the model becomes mathematically unstable. Real valuations may also include debt adjustments, excess cash, margin analysis, multiple scenarios, and separate yearly cash-flow forecasts rather than one constant growth assumption. Even so, a clean DCF calculator is one of the best ways to understand how future economic benefit is turned into present value. This page gives a practical starting point for valuation work and comparison analysis.