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DCF Calculator
Discount projected free cash flow and a terminal value to an enterprise value.
A discounted cash flow values a business as the present value of the cash it will generate: project free cash flow, discount each year at WACC, add a terminal value for everything beyond the explicit window, and sum. This calculator does it live so you can see how sensitive the answer is to WACC and the terminal growth rate.
Watch the terminal value line — it usually lands at 60 to 80 percent of enterprise value, which is exactly why interviewers press on the terminal assumptions. Set WACC at or below the terminal growth rate and the Gordon Growth formula breaks; the tool flags it instead of returning a nonsense number.
Cash flow
Discounting
Enterprise value
$1,377.3M
Terminal value is 69.9% of enterprise value
Projected free cash flow
Year
FCF
Factor
PV
Year 1
$100M
0.909
$90.9M
Year 2
$105M
0.826
$86.8M
Year 3
$110.3M
0.751
$82.8M
Year 4
$115.8M
0.683
$79.1M
Year 5
$121.6M
0.621
$75.5M
With your numbers
TV
$121.6M × 1.02 ÷ (10.0% − 2.0%) = $1,549.8M
PV of TV
$1,549.8M ÷ 1.10^5 = $962.3M
EV
$415.1M + $962.3M = $1,377.3M
PV of explicit FCF
$415.1M
Terminal value (undiscounted)
$1,549.8M
PV of terminal value
$962.3M
Enterprise value
$1,377.3M
The formula
Enterprise value is the present value of the explicit free cash flows plus a discounted terminal value:
The Gordon Growth terminal value capitalizes the final-year cash flow at one perpetual growth rate :
WACC must stay above , or the denominator turns zero or negative and the value blows up — the classic DCF trap.
How it works
- Project free cash flow. Grow Year-1 free cash flow at the projection growth rate across the explicit period.
- Discount to present value. Divide each year's free cash flow by (1 + WACC) raised to that year to get its present value.
- Add a terminal value. Gordon Growth terminal value is final-year FCF times (1 + terminal growth) divided by (WACC minus terminal growth), then discounted back to today.
- Sum to enterprise value. Add the present value of the explicit cash flows and the present value of the terminal value.
Or drill DCF interview questions.