DCF Calculator: Value a Company with Discounted Cash Flow
A discounted cash flow (DCF) valuation estimates what a business is worth today based on the cash it will generate in the future.
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How a DCF Valuation Works
- Forecast free cash flow for 5–10 years.
- Estimate a terminal value for all the years after that, assuming steady long-term growth.
- Discount everything back to today at the company’s cost of capital (WACC).
- Subtract net debt to get the value belonging to shareholders, then divide by shares for a per-share value.
Enterprise value = Σ PV of forecast FCF + PV of terminal value
Equity value = Enterprise value − Net debt
Works in any currency — enter all amounts in the same one.
Choosing the Inputs
| Input | Typical range | Tip |
|---|---|---|
| Forecast growth | 0%–20% | Base it on recent revenue growth, then fade it toward the economy’s growth rate |
| Terminal growth | 2%–4% | Should not exceed long-run GDP growth |
| Discount rate (WACC) | 8%–15% | Higher for smaller or riskier companies |
| Free cash flow | — | Operating cash flow minus capital expenditure |
Why DCF Values Are Sensitive
Terminal value usually makes up 60%–80% of a DCF valuation, so small changes to the discount rate or terminal growth swing the result dramatically. Professionals run several scenarios — conservative, base and optimistic — and look at the range, not a single number.
Popular Variations
Frequently Asked Questions
What is free cash flow?
Cash from operations minus capital expenditure — the cash a business generates that could be paid to investors.
Is DCF good for startups?
Not usually. Startups often have negative or unpredictable cash flows, so investors use comparable valuations or the venture capital method instead.
What discount rate should I use?
The company’s weighted average cost of capital (WACC). Use our WACC calculator to estimate it.
What is the difference between enterprise value and equity value?
Enterprise value is the value of the whole business. Equity value is what is left for shareholders after subtracting debt and adding cash.