Audited 05 Aug 2026·Last updated 28 Oct 2026·3 citations·Tier 2·0 uses

Dcf Calculator

Value a business or project by discounting each year's cash flow and a terminal value back to today at one annual rate, with the terminal share shown.

Dcf Calculator

%
$
DCF present value
161,382.42
Total present value in dollars: discounted forecast cash flows plus the discounted terminal value, an enterprise value when the inputs are free cash flows to the firm and a WACC.
PV of forecast cash flows
86,250.94
PV of terminal value
75,131.48

Background.

A business, a rental property or a new product line is worth what it will pay out, but cash that arrives in three years is not worth the same as cash in hand today. Discounted cash flow valuation puts the two on one footing: each future year's cash is shrunk by the return an investor demands for waiting and for bearing the risk, and the shrunken amounts are added together.

The method has two halves. The first is an explicit forecast, year 1, year 2 and onward, for as long as you can forecast with some confidence. The second is the terminal value, one lump that stands in for everything after the forecast stops. It is usually estimated by assuming the cash keeps growing at a slow steady rate, or by applying a sale multiple to the final year. Both halves are brought back to today with the same rate.

The rate is what makes the answer move. At 10% a dollar due at the end of year 3 is worth about 75 cents now; at 15% it is worth about 66 cents. Because the terminal value sits at the far end of the forecast and is often the largest single number, a point or two on the rate, or on the growth assumption behind the terminal value, can shift the result more than any line of the forecast.

Here every cash flow is treated as arriving on the last day of its year, one rate applies to every year, and the terminal value and rate are yours to supply; nothing is derived for you. Feed it free cash flows to the whole firm and a weighted average cost of capital and the total is an enterprise value, before debt is taken off. Either way it is a model of your assumptions, not a price anyone has agreed to pay.

What is dcf calculator?

A discounted cash flow (DCF) value is the present value of a series of expected future cash flows plus a terminal value, each discounted at a rate reflecting both the time value of money and the risk of those cash flows. On this page cash flows land at the end of years 1, 2, 3 and so on, the terminal value lands at the end of the last forecast year, and one constant annual rate is used throughout. With unlevered free cash flows and a WACC the total is an enterprise value; with cash flows to shareholders and a cost of equity it is an equity value.

How to use this calculator.

  1. List the expected cash flow for each forecast year in order, starting with year 1, separated by commas, spaces or line breaks. At least two years are needed. Type plain digits: 30000, not 30,000, because the comma is read as a separator and 30,000 would become two years of 30 and 0.
  2. Enter the annual discount rate as a percentage. For free cash flow to the firm this is normally a weighted average cost of capital; for a personal project it is the return you could earn elsewhere at similar risk.
  3. Enter the terminal value in dollars as of the end of the final forecast year. Estimate it separately, for example with a growth perpetuity or an exit multiple, and enter 0 if the project simply stops.
  4. Read the total, then compare the two parts listed under it. When the terminal value supplies most of the total, rerun the page a couple of points above and below your rate before trusting the figure.

The formula.

PV=sum CF_t/(1+r)^t + terminal value/(1+r)^n
CF_t · cash flow expected at the end of year t, in dollarsr · annual discount rate as a decimal (10% = 0.10)t · year number, 1 for the first forecast yearn · number of forecast years enteredterminal value · value of all cash after year n, stated at the end of year n

PV = Σ CF_t ÷ (1 + r)^t + TV ÷ (1 + r)^n. CF_t is the cash flow at the end of year t, r is the discount rate as a decimal, n is the number of forecast years and TV is the terminal value. Each 1 ÷ (1 + r)^t is a discount factor: at 10% the factors are 0.9091 for year 1, 0.8264 for year 2 and 0.7513 for year 3. The terminal value is divided by the same factor as the final cash flow, because it is a value stated at the end of that year. All flows are assumed to arrive on the last day of their year. The mid-year convention, which discounts each year's cash by half a year less to reflect money earned through the year, would give a somewhat higher figure and is not applied. Individual cash flows may be negative, for a year of heavy spending; the terminal value may not.

A worked example.

Example

Suppose the forecast is $30,000, $35,000 and $40,000 for years 1 to 3, with a terminal value of $100,000 at the end of year 3 and a 10% discount rate. Year 1: 30,000 ÷ 1.1 = $27,272.73. Year 2: 35,000 ÷ 1.1² = 35,000 ÷ 1.21 = $28,925.62. Year 3: 40,000 ÷ 1.1³ = 40,000 ÷ 1.331 = $30,052.59. Those three add up to $86,250.94. The terminal value takes year 3's divisor: 100,000 ÷ 1.331 = $75,131.48. The DCF value is $86,250.94 + $75,131.48 = $161,382.42. Undiscounted, the same amounts total $205,000, so waiting and risk at 10% take about a fifth off the face value. At 12% the value falls to $154,336.73; at 8% it rises to $168,921.15. Even though the terminal value here is only 2.5 times the final year's cash, it supplies 47% of the total.

discount Rate Percent10
terminal Value100,000
annual Cash Flows30000,35000,40000

Frequently asked questions.

How do I come up with a terminal value?
The two usual routes are a growth perpetuity and an exit multiple. The perpetuity version is TV = CF in year n+1 ÷ (r − g), where g is a long-run growth rate kept below r. With the example's $40,000 growing 2% and a 10% rate, that gives 40,800 ÷ 0.08 = $510,000, and the total would jump to $469,421.49. The exit-multiple version applies a multiple seen in comparable sales to a final-year figure such as earnings.
Which discount rate should I use for a DCF?
Match the rate to whose cash you are valuing. Free cash flow to the whole firm is discounted at a weighted average cost of capital, cash flow to shareholders at the cost of equity, and a personal project at the return you would expect elsewhere for similar risk. Riskier cash deserves a higher rate, which lowers the value.
Can I include a year of negative cash flow, such as an upfront investment?
Yes. Negative entries are accepted and subtract their present value from the total. Putting a $50,000 outlay in year 1 and moving the example's three cash flows and terminal value back a year gives $101,256.74. Only the terminal value field refuses negatives, so a business expected to wind down at a loss has to be handled through the final forecast year instead.
What is the mid-year convention, and does this page use it?
It discounts each year's cash flow by t − 0.5 years instead of t, on the reasoning that a business earns cash through the year rather than on its last day. This page does not use it. For the example's three forecast years it would add about $4,210 to their present value, so the end-of-year figure here is the more conservative of the two.
Is the DCF value the price I should pay for the company or share?
Not directly. With free cash flows to the firm it is an enterprise value, so net debt must be subtracted to reach the value of the equity, and that divided by the share count gives a per-share figure. Even then it only restates your forecast and rate; it is not investment advice or a market price.
How many years should the forecast cover?
Long enough for the business to settle into the steady pattern that your terminal value assumes. A company still growing fast or recovering from a bad patch needs more explicit years before a simple growth perpetuity is believable, while a mature, stable business can be forecast for fewer years without much loss.

References& sources.

  1. [1]OpenStax, Rice University. Principles of Finance, 2022. Chapters 6–10. Retrieved 2026-08-06.
  2. [2]U.S. Internal Revenue Service. Tax guidance current 2026. Official forms, instructions and tax topics. Retrieved 2026-08-06.
  3. [3]U.S. Securities and Exchange Commission. Investor.gov current 2026. Investment products and risk. Retrieved 2026-08-06.

How this page was produced

Published by
Quanta Calculator
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Daniel, Quanta Calculator Researcher
Primary sources
3 cited below
Method
PV=sum CF_t/(1+r)^t + terminal value/(1+r)^n
Published
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