This free DCF calculator values a company the way analysts do: project its free cash flows, then discount them back to today. Move the sliders — the enterprise value updates live.
The formula
Discounted cash flow sums each future year’s cash, shrunk by your required return:
Value = Σ CFt ÷ (1 + r)^t — where CFt is the cash flow in year t and r is the discount rate. This tool projects 10 years of cash flow from your starting figure and growth rate, then discounts each year at your chosen rate. We deliberately exclude a terminal value so you see only what the explicit forecast is worth — most “DCF says it’s worth X” arguments hide 60-80% of the value in the terminal assumption.
Worked example
A business generates $10M of free cash flow, growing 8% a year, and you want a 12% return (your WACC). Year 1 brings $10.8M, worth $9.64M today. Year 5 brings $14.7M, worth $8.34M today. Summing all ten discounted years gives roughly $142M of enterprise value. Raise the discount rate to 15% and value falls to about $118M — that sensitivity is the whole game in DCF.
How to read the result
The output is enterprise value — the value of operations, before netting off debt or adding cash. Two honest cautions: growth rates above ~15% for ten straight years are rare in the real world, and the discount rate matters more than any other input. If you don’t know what rate to use, calculate it properly with our WACC calculator — that’s exactly what it’s for.
What discount rate should I use in a DCF?
The company’s weighted average cost of capital (WACC) is standard — typically 8-14% for established firms, higher for risky or early-stage businesses. Compute yours with the WACC calculator.
What is free cash flow?
Cash generated by operations minus capital expenditure — the money genuinely available to investors after the business funds itself. It is not the same as profit.
Why is there no terminal value here?
Terminal value often dominates a DCF and hides aggressive assumptions. Excluding it shows what the explicit 10-year forecast alone is worth — a more conservative, more honest number.
Is a DCF the best way to value a company?
It is the most theoretically sound, but it is only as reliable as its inputs. Analysts usually cross-check DCF against market multiples like EV/EBITDA before trusting either.