DCF Valuation Calculator
The formula
What the dcf valuation tells you
The present value of every future free cash flow a business will generate, split into an explicit forecast window and a terminal tail — valuation from first principles.
Calculation: Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth. Enter your inputs and every substitution is shown below the result.
Reading the result
The value per share is the point, but the terminal share is the lesson: when 70%+ of value is beyond year five, the DCF is a story with arithmetic attached.
Rules of thumb: Terminal growth capped at long-run GDP (2–3%); WACC 7–13% across most listed firms
Limitations and best practice
DCF is hypersensitive to the spread between WACC and terminal growth; ±1% on each moves value 20–40%. Anyone quoting a single DCF number is quoting precision they do not have.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Should DCF ever be a point estimate?
What beats a DCF?
Source & methodology
Standard DCF (McKinsey Valuation, Damodaran).
DCF Valuation: the number, the method and the caveats
This page was written for one job: turning your own inputs into a defensible figure, with the working shown. There are plenty of pages about DCF Valuation; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
Like most useful measures, DCF Valuation is a summary, and summaries hide as much as they reveal. The companion outputs and the input table are here to reopen what the headline compressed.
Business runs on numbers that are cheap to compute and expensive to ignore. DCF Valuation in Business & Entrepreneurship is one of those: Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth, and the gap between founders who check and founders who hope shows up exactly here.
Nothing below is stock text pasted around a number: the worked example computes intrinsic equity value = $10,057,709 from this tool’s own defaults, and the sensitivity section ranks the inputs that move the result — Discount rate / WACC first, at ≈14.6 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.
The DCF Valuation formula, explained
Here is the complete model this tool runs — Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Current-year free cash flow ($) (example value 680,000) is a measured number in the unit named by the label; the formula does not convert for you. Be precise about the boundary (exact date, start of month); time inputs decide the exponent in most formulas.
Growth for stage 1 (%) (example value 10) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Check the convention first: if the source says “6.5 % per year”, type 6.5 and let the formula do the rest.
Stage-1 years (example value 6) is a plain measured quantity — the unit shown in the label is the unit the formula expects. If the period is partial, decide whether you mean elapsed or planned time and keep that meaning across every field.
Terminal growth (%) (example value 2) is a quantity rather than a category — precision here is cheap and worth having. Rates are the most mis-transcribed input on any page like this; copy it from the document rather than retyping from memory.
Discount rate / WACC (%) (example value 12) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Rates are the most mis-transcribed input on any page like this; copy it from the document rather than retyping from memory.
Shares outstanding (example value 1,199,822) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. This input feeds the formula directly; a defensible figure here is worth more than false precision anywhere else.
The default DCF Valuation calculation, written out in full
Rather than describe the calculation, here it is end to end — every substitution in order, starting from the inputs above. Starting figures: Current-year free cash flow ($), Growth for stage 1 (%), Stage-1 years, Terminal growth (%). The endpoint of that chain is $10,057,709 of intrinsic equity value, sitting in the “Per share: $8.38 — 62% of the value sits in the terminal assumption” band.
- Grow FCF 10% for 6 years, discount each at 12%: PV = $3,832,455
- TV = final FCF × (1 + 2%) ÷ (12% − 2%) = $12,287,547; discounted $6,225,254
- Total = $10,057,709
PV of explicit years — $3,832,455. If your inputs change, this is usually the first companion figure to move.
PV of terminal value — $6,225,254. Read next to the headline, this is the figure that shows the shape of the trade-off.
Terminal value itself — $12,287,547. Compare it against the main result of $10,057,709 before drawing conclusions.
Implied value per share — $8.38. Read next to the headline, this is the figure that shows the shape of the trade-off.
Keep this worked example open while you enter your own figures: matching the shape of the substitution is the fastest way to spot a unit or convention mistake.
The DCF Valuation corridor: your result across a realistic band
Read this table as the practical error bar on the headline figure. It answers the question people actually have after seeing a single number: how wrong could this be if the main input is off by ten or twenty percent?
| Discount rate / WACC setting | Intrinsic equity value |
|---|---|
| 80 % of the example value | $13,460,429 |
| 90 % of the example value | $11,524,599 |
| example inputs | $10,057,709 |
| 110 % of the example value | $8,908,786 |
| 120 % of the example value | $7,985,316 |
Across 5 settings of Discount rate / WACC, the result spans $7,985,316 to $13,460,429. A decision that only works at one row of this table is a decision waiting for an input to move. Reproduce it in the form above by editing Discount rate / WACC alone; the substitution steps will follow your figures exactly.
Where DCF Valuation is fragile — and where it is not
Nobody should have to guess which input matters. The engine was re-run once per field below — ten percent up, ten percent down, everything else frozen — and the results ranked by how far they moved the intrinsic equity value. For DCF Valuation the ranking is measured rather than guessed, and it belongs to these defaults: shift the starting point and the order can shift with it.
- Discount rate / WACC: ten percent up gives $8,908,786, ten percent down gives $11,524,599 — ≈14.6 % of the intrinsic equity value either way
- Current-year free cash flow: ten percent up gives $11,063,480, ten percent down gives $9,051,938 — ≈10.0 % of the intrinsic equity value either way
- Stage-1 years +10 % → DCF Valuation = $9,648,480 · −10 % → $9,279,661 (the intrinsic equity value shifts ≈7.7 %)
- Nudge Growth for stage 1 by ±10 % and DCF Valuation lands between $9,607,445 and $10,527,005 (sensitivity ≈4.7 %)
- Nudge Terminal growth by ±10 % and DCF Valuation lands between $9,923,678 and $10,197,210 (sensitivity ≈1.4 %)
Discount rate / WACC is the dominant lever here: ten percent either way moves the result by about 14.6 %, from $8,908,786 to $11,524,599. Spend your verification effort there first, and treat Current-year free cash flow as the second priority (≈10.0 % per ten percent). The rest of the inputs earn only a rounding-error of attention, and that asymmetry is the practical payoff of measuring rather than asserting.
Interpreting the DCF Valuation verdict
A number on its own is trivia; a number against a range is intelligence. The verdict attached to the default calculation — “Per share: $8.38 — 62% of the value sits in the terminal assumption” — is one band on a ladder your own figure may sit somewhere else on. How much of that band is luck? On Discount rate / WACC alone ten percent either way covers $8,908,786 to $11,524,599. The practical reading rules: ask what would have to change to move you one band. If the answer is “a small, plausible input difference”, the band itself is not the finding — the uncertainty is.
Where DCF Valuation sits next to similar measures: this tool answers “how much is the DCF Valuation”, while the related calculators answer “what do I do about it”. Reading the result alone tends to over-weight a single snapshot; pairing it with the companion tools above turns the number into a decision.
Why DCF Valuation results go wrong — and how to prevent it
DCF is hypersensitive to the spread between WACC and terminal growth; ±1% on each moves value 20–40%. Anyone quoting a single DCF number is quoting precision they do not have. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Copying a single headline number without checking the companion outputs. The tool reports PV of explicit years, PV of terminal value and Terminal value itself alongside the main result precisely because DCF Valuation in isolation misleads — the secondary columns are where outliers and trade-offs show up.
One mistake is specific to this engine: assuming every input matters equally. The computation above shows Discount rate / WACC dominating — a careful figure there beats false precision everywhere else.
Another is comparing across contexts: a DCF Valuation computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
Before you trust your DCF Valuation: a short checklist
- Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
- Confirm the example values are plausible for your own situation before replacing them.
- Re-verify Discount rate / WACC against a source document — ten percent of error there moves the headline by ≈14.6 %.
- Record the date and the inputs alongside the number so future-you knows what was assumed.
- Note the date and the inputs beside the number so the figure can be audited later.
- Repeat the ±10 % test on the inputs that matter and see whether the decision — not just the number — still holds.
How to use the DCF Valuation tool properly
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — gather before you type. DCF Valuation depends on current-year free cash flow ($), growth for stage 1 (%), stage-1 years, terminal growth (%), discount rate / wacc (%), shares outstanding. Collect them from a source document — a statement, a report, an invoice, a log — rather than from memory, because recalled inputs are the single largest cause of wrong results. Numbers are cheap to produce and expensive to retract; the extra minute is the cheapest insurance available.
Step 2 — baseline before exploration. Get one defensible Intrinsic equity value on screen before you start nudging numbers. Without a baseline, every variation looks interesting and none of them means anything. Re-running a number costs seconds; retracting a decision costs considerably more.
Step 3 — play with the inputs on purpose. Ten percent up, ten percent down, one field at a time. Within a few minutes you will know this calculation better than most people who quote its results. When two sources disagree, it is almost never the arithmetic that differs.
Step 4 — stress before you commit. A decision that survives a ten-percent squeeze on its two biggest inputs needs no luck to be sound. One that does not survive is a decision about hope, not about arithmetic. Repeating a calculation with the same numbers proves only that the arithmetic is reliable — which is worth knowing.
Step 5 — write the one-line memo. “Intrinsic equity value = $10,057,709 on this date, from these inputs.” That line is the entire deliverable; everything else on this page is how you earned the right to write it. A calculation you cannot explain to somebody else is a calculation you cannot defend.
Where DCF Valuation matters in practice
In Financial Analysis the figure computed here is usually the first one somebody asks to see. Having it — with the formula behind it — changes your position in the conversation from participant to reference. Precision is a promise you make about your data; make sure your inputs can keep it.
Professionals in Financial Analysis use this style of calculation as a screening filter before spending real money or effort: a quick DCF Valuation check eliminates weak options in minutes, and the survivors earn the deeper, slower analysis. The fastest sanity test is to guess the answer first and see how far the calculation disagrees.
Treat DCF Valuation like a smoke alarm rather than a painting — its value is in being tested periodically, not in being admired once. The test of a good estimate is not that it feels right but that it changes what you do.
The questions that come up most about DCF Valuation
What affects DCF Valuation the most?
DCF Valuation is driven above all by Discount rate / WACC. Perturbing only that field by ten percent either way produced $8,908,786 against the $10,057,709 baseline — a ≈14.6 % response, while Current-year free cash flow manages ≈10.0 %.
Which matters more: current-year free cash flow or discount rate / wacc?
By the numbers, Discount rate / WACC: a ten-percent change in it moves the result ≈14.6 %, versus ≈10.0 % for Current-year free cash flow. Spend your measuring effort in that order — precision on the weaker lever buys almost nothing.
What is a typical DCF Valuation?
There is no honest universal average for DCF Valuation, but there is a reference point: the defaults on this page produce $10,057,709 (Per share: $8.38 — 62% of the value sits in the terminal assumption). Replace the inputs with your own and compare — that comparison is the useful meaning of “typical”.
How do I calculate DCF Valuation by hand?
Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth is the entire method. Work the inputs in that order — Grow FCF 10% for 6 years, discount each at 12%: PV = $3,832,455 — and you will reach $10,057,709 on the default figures, the same number this tool prints.
What happens to DCF Valuation if discount rate / wacc changes by 10 %?
On these inputs a ±10 % change in discount rate / wacc takes DCF Valuation to $8,908,786 against the $10,057,709 example — around 14.6 % of the headline. The same test on every other field is in the sensitivity section.
Is the DCF Valuation result of $10,057,709 good or bad?
The tool answers “what”, not “whether”: $10,057,709 carries the verdict “Per share: $8.38 — 62% of the value sits in the terminal assumption” for the default case, which is a starting interpretation rather than a verdict on your situation. Re-run with your own figures and compare the bands.
Can DCF Valuation be negative or empty?
Yes, and that is informative rather than broken: a negative DCF Valuation usually means the inputs encode an outflow or a shortfall, and the verdict band above labels exactly that situation instead of hiding it.
How do I calculate DCF Valuation manually?
Write down the inputs, then follow the printed steps in order — Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth. A spreadsheet replicates it with two or three cells. The manual route is worth doing once to build intuition; after that the calculator saves time and eliminates transcription slips.
Should DCF ever be a point estimate?
No — it should be a range from sensitivity tables (WACC × growth), and the decision should survive across most of the range.
What beats a DCF?
For early-stage firms with no cash-flow logic, nothing beats staging and comparables; a DCF on negative FCF is fantasy with discount factors.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
The vocabulary of DCF Valuation
- PV of explicit years
- $3,832,455 in the default DCF Valuation calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- PV of terminal value
- $6,225,254 on the example inputs — a companion figure printed beside the headline of DCF Valuation so that no result is read in isolation.
- Terminal value itself
- $12,287,547 on the example inputs — a companion figure printed beside the headline of DCF Valuation so that no result is read in isolation.
- Intrinsic equity value
- The primary output of this tool: $10,057,709 for the default inputs, computed exactly from Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth.
- Worked example
- The step-by-step substitution printed above, so the arithmetic can be re-derived by hand or in a spreadsheet.
- Verdict band
- A named zone on the range of plausible results; the example inputs land in “Per share: $8.38 — 62% of the value sits in the terminal assumption”, and your inputs may not.
- Sensitivity (±10 %)
- How far the DCF Valuation moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Methodology, sources and limits
The model is published arithmetic implemented exactly as written: Value = Σ FCFₜ/(1+WACC)ᵗ + terminal value discounted; TV via Gordon growth. Source of record: Standard DCF (McKinsey Valuation, Damodaran). Any other implementation of this model should return the same figure for the same inputs. If one does not, the difference is in its assumptions — which this page prints and that one probably does not.
This page is an estimation aid, not professional advice. The design rule is simple: two people entering identical figures must get identical answers. Nothing is smoothed, weighted or adjusted behind the scenes; where judgement enters, this page says so and names the input responsible.
Next steps after the calculation
Save the number together with its inputs and today’s date; a DCF Valuation figure without context is unusable the moment an input changes.
Whoever you are (people who need one trustworthy number before their next decision), the next step is the same: replace the example inputs with your own, note the date, and re-run whenever a figure moves. In Business & Entrepreneurship, a dated figure is a trend, and an undated one is a rumour.