Discounted Cash Flow (DCF) Calculator
DCF values an investment by the cash it's expected to produce, discounted back to today's dollars. It's how professionals price businesses, projects, and acquisitions.
What does this tool do?
Discounted Cash Flow (DCF) Calculator computes the result directly in your browser — DCF values an investment by the cash it's expected to produce, discounted back to today's dollars. It's how professionals price businesses, projects, and acquisitions. Nothing you enter is uploaded or stored.
Formula: present value = Σ (cash flow each year ÷ (1 + discount rate)^year), plus a discounted terminal value. Terminal value: the perpetual value beyond the projection window, modeled as last-year cash flow × (1 + terminal growth) ÷ (discount rate − terminal growth) — only meaningful when the discount rate exceeds the terminal growth rate. Discount rate: use the weighted average cost of capital (WACC) or your required return — a higher rate lowers value. Caveat: DCF is sensitive to assumptions; small changes in growth or discount rate swing the result. Model a range of scenarios, not one number.
FAQ
What is DCF used for?
Valuing a business, project, or acquisition by discounting its expected future cash flows to present value. It's the standard professional method for intrinsic value.
How does the discount rate affect the valuation?
Directly and strongly — a higher discount rate reduces present value. The rate should reflect the risk and opportunity cost of capital; use WACC or a comparable required return.
What is terminal value and why does it matter?
The value of all cash flows beyond your explicit projection years, captured with a perpetual-growth formula. It's often 50-75% of a DCF's total value, so the terminal growth assumption deserves scrutiny.
Figures are editable example defaults for modeling, not quotes or advice. Financial, tax, and medical outcomes vary with your situation — verify with a qualified professional (CFP, CPA, tax advisor, or veterinarian).