DCF Calculator
Discounted cash flow valuation with the number nobody reports: how much of the answer comes from the terminal value rather than from anything you forecast. On typical inputs it is about three quarters.
Free · No signup · The maths runs in your browser
Estimates from your inputs, not financial, legal or tax advice.
Inputs
Weighted average cost of capital.
Forever. Above ~3% outgrows the economy.
Debt less cash. Negative if net cash.
Leave at zero to see equity value only.
Free cash flow
| Year | Free cash flow | Discounted |
|---|---|---|
| No years yet. Tell Coach your cash flows, or add a year below. | ||
The valuation fills in once Coach has your numbers, or type them above.
How it works
- 1
Project free cash flow
One figure per year, for as many years as you want to forecast. Free cash flow, not revenue and not net income — cash left after the business has paid for everything it needs to keep running, including capital expenditure.
- 2
Set the discount rate and terminal growth
Your weighted average cost of capital, and the rate the business grows forever afterwards. These two numbers take a few seconds to enter and, as this dcf calculator shows in the results, they decide most of the valuation.
- 3
Read the sensitivity grid before the headline
Two points either way on each assumption — a range most people would call reasonable — and the answer typically more than doubles across the grid. That spread is the honest output. A single figure quoted to the cent is not.
The calculation
PV of a year = FCF_t ÷ (1 + WACC)^t
terminal value = FCF_n × (1 + g) ÷ (WACC − g)
enterprise value = Σ PV(FCF) + PV(terminal value)
equity value = enterprise value − net debt
Worked example
Five years of free cash flow, discounted at 10%, terminal growth 2.5%, net debt $2m, one million shares.
| Year | Free cash flow | Discounted |
|---|---|---|
| 1 | $1,000,000 | $909,091 |
| 2 | $1,200,000 | $991,736 |
| 3 | $1,400,000 | $1,051,841 |
| 4 | $1,600,000 | $1,092,822 |
| 5 | $1,800,000 | $1,117,658 |
| Projection | $5,163,147 |
The terminal value is $1,800,000 × 1.025 ÷ (0.10 − 0.025) = $24,600,000, which discounted over five years is $15,274,665.
| Enterprise value | $20,437,812 |
| Less net debt | −$2,000,000 |
| Equity value | $18,437,812 |
| Per share | $18.44 |
Three quarters of that is the terminal value
$15.3m of the $20.4m — 74.7% — comes from the perpetuity. The five years of cash flow you forecast, argued over, and built a model around contribute the other quarter.
This is not a quirk of these inputs. It is what the arithmetic does on any normal set of them, because a perpetuity is very large next to five finite years. The consequence is worth stating plainly:
Most of a DCF's answer comes from two numbers entered in about a second — the discount rate and the perpetual growth rate — rather than from the forecast that took a week.
That is not an argument against DCF. It is an argument for spending your effort on the two assumptions, and for treating the third decimal place of the output as decoration.
The sensitivity grid is the real output
Move each assumption two points either way — a range nobody would call unreasonable — and the value per share runs from $11.81 to $40.04. The same model, the same cash flows, and a spread of more than three times from top to bottom.
Which is why the grid sits on the page and not in an appendix. A DCF's honest output is a range. Quoted as a single number to the cent, it implies a precision the method has never had.
Where the model breaks
The terminal formula divides by (WACC − g). As growth approaches the discount rate the denominator approaches zero and the valuation runs to infinity; push growth above the discount rate and the value turns negative.
Neither is a large or small company. Both are a broken assumption — nothing grows faster than its cost of capital forever. This tool refuses to produce a figure there rather than reporting one confidently, which is the more common behaviour and the more dangerous one.
Worth knowing that terminal growth above roughly 3% is already claiming the company outgrows the whole economy in perpetuity, long before the formula visibly breaks.
What a DCF cannot do
It cannot tell you the cash flows are right. A DCF is arithmetic performed on a forecast and is exactly as good as that forecast — no better, and no more precise.
Its characteristic failure is not a modelling error. It is a plausible-looking projection nobody stress-tested, made to look rigorous by five decimal places and a terminal value that quietly supplied three quarters of the answer.
Frequently asked questions
- What is a DCF?
- A discounted cash flow valuation: project the cash a business will generate, discount each year back to today at your cost of capital, and add a terminal value for everything beyond the forecast. The result is what those future cash flows are worth now.
- How do you calculate DCF?
- Divide each year's free cash flow by (1 + WACC) raised to that year number and add them up. Then add the terminal value — final-year cash flow times (1 + g), divided by (WACC - g) — discounted back over the same period. Subtract net debt and you have equity value. Any dcf calculator is doing exactly that, whatever it looks like on the surface.
- What is terminal value and why does it dominate?
- It represents every year beyond your forecast, collapsed into one figure. It dominates because a perpetuity is enormous next to five finite years: on the worked example below it is $15.3m of a $20.4m valuation. Three quarters of the answer comes from two assumptions rather than from the forecast anyone actually argues about.
- What terminal growth rate should I use?
- Between 2% and 3% in most cases, roughly long-run inflation or GDP growth. The constraint is not taste but logic: a company growing faster than the economy forever eventually becomes the economy. Anything above 4% is usually a modelling convenience rather than a belief.
- Why does my valuation break when growth is high?
- Because the formula divides by (WACC − g). As growth approaches the discount rate the denominator approaches zero and the value runs to infinity; above it, the value goes negative. A dcf calculator that returns a confident number there is showing you a broken model, so this one refuses instead.
- What discount rate should I use?
- Your weighted average cost of capital — the blended return debt and equity holders require. For a private, early-stage company it is higher than most people assume, often 15% or more, because the risk is higher. Using a public-market rate on a startup will overvalue it substantially.
- Is a dcf valuation calculator reliable for startups?
- Less than for mature businesses, and the reason is structural. A dcf valuation calculator needs a forecast credible enough to discount, and a company with two years of history and no profits does not have one. The output has the same number of decimal places either way, which is precisely the danger.
- What is the difference between enterprise value and equity value?
- Enterprise value is what the operating business is worth to all capital providers. Equity value is what is left for shareholders after net debt is repaid. Subtract debt and add cash to get from one to the other — which is why a company with large cash reserves is worth more to shareholders than its operations alone suggest.
- How many years should I forecast?
- Five to ten is conventional. Extending the forecast does less than people expect: it shifts value out of the terminal value and into projected years, but those later years are discounted so heavily, and guessed so loosely, that the total a dcf calculator returns barely moves. It buys the appearance of rigour more than the substance.
- Should I use free cash flow or net income?
- Free cash flow. Net income includes non-cash charges like depreciation and excludes capital expenditure, so it can be strongly positive while the business consumes cash. A DCF values cash the owners could actually take out, which is the only thing a discount rate is meaningful against.
- Can I do this in a spreadsheet instead?
- Easily — a dcf calculator excel model is a dozen formulas. What a dcf calculator excel sheet almost never includes is the sensitivity grid, because building it means rebuilding the whole model twenty-five times. That omission is exactly what makes the single output look more certain than it is.
- Do you store the numbers I enter?
- Not on our side, and there is no account. The calculation runs in your browser, so numbers you type into the inputs never leave it. When you chat with Coach, your message and the calculator's current numbers go through our server to OpenAI, which writes Coach's reply; we keep no copy of either and log only counts, such as how many tokens a reply used. The chat is saved in your own browser so you can come back to it. If you would rather not share real financials, type them into the inputs yourself and skip the chat.
- Why is this free, and what is Tekk?
- Tekk turns your product into self-improving software: sixteen loops watch your codebase, bring you proposals you greenlight or decline, and your coding agent builds the result. This calculator costs us nothing to run, and every line of a cash flow forecast quietly assumes the product ships. No signup, no run limit, no upsell inside the tool.
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