Business/asset value from future cash flows. The DCF Calculator takes free cash flow year 1, year 2, year 3, year 4, year 5, discount rate, terminal growth rate and returns enterprise value (dcf) plus present value of years 1–5, terminal value (at year 5), present value of the terminal value. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Investment maths is about comparing money at different points in time on a fair basis. Compound rates, discounting and annualised returns let you compare options of different sizes and durations. Use the worked example below to check the maths against your own figures.
How the DCF Calculator works
A discounted cash flow valuation adds the present value of five years of forecast cash flows to a terminal value that captures everything after year five. The terminal value usually dominates, so the growth rate must stay below the discount rate and be conservative.
Worked example
With the example values (free cash flow year 1 of $100,000, year 2 of $110,000, year 3 of $121,000, year 4 of $133,000, year 5 of $146,000, discount rate of 12%, terminal growth rate of 3%), the enterprise value (dcf) is $1,378,577.90; present value of years 1–5 $430,470.68, terminal value (at year 5) $1,670,888.89, present value of the terminal value $948,107.23. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is enterprise value (dcf) calculated?
value = ∑ cash flowt ÷ (1 + r)t + terminal value ÷ (1 + r)5, where terminal value = cash flow5 × (1 + g) ÷ (r − g).
Which figures do I need?
Free cash flow year 1, year 2, year 3, year 4, year 5, discount rate, terminal growth rate. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Does the calculator account for taxes and fees?
Only where there is an input for them. For a true net return, add fees and taxes to your inputs or use the stock and crypto profit calculators, which include them.
