DCF Calculator

The Gordon Growth terminal value divides by (WACC minus terminal growth). If WACC is less than or equal to the growth rate, the denominator is zero or negative and the value is infinite or nonsensical — a common interview trap. This calculator flags it rather than returning a number.

Typically 60 to 80 percent of enterprise value, depending on the length of the explicit period and the discount rate. Because it is such a large share, interviewers focus on whether your terminal growth rate and exit assumptions are defensible.

Free cash flow reflects the actual cash available to all capital providers after reinvestment, so discounting it at WACC (a blended cost of debt and equity) yields enterprise value. Net income is an accounting figure that includes non-cash items and is levered.