The workhorse of valuation, stripped to its essentials. Enter free cash flow, a growth rate, a discount rate and shares outstanding — get an intrinsic value per share to hold up against the market price.
Answer first: a discounted cash flow (DCF) model says a business is worth all the cash it will ever generate, translated into today’s dollars. This calculator runs the classic two-stage version: it grows last year’s free cash flow at your chosen rate for a number of high-growth years, then assumes the company settles into a slow “terminal” growth rate forever. Every future cash flow is discounted back to the present at your discount rate, summed, and divided by shares outstanding to give an intrinsic value per share.
Value = Σ FCFt / (1+r)t + terminal value / (1+r)N
where terminal value = FCFN+1 ÷ (r − gterminal). With $500M of FCF growing 8% for 10 years, a 10% discount rate and 2.5% terminal growth, the model values the firm at roughly $9.4 billion — about $94 per share on 100M shares.
Free cash flow is operating cash flow minus capital expenditure — the money left after keeping the business running. The discount rate is your required return; many analysts use 8–12% for established companies, higher for risky ones. Terminal growth should stay at or below long-run economic growth — 2–3% is conventional. Type 6% terminal growth with an 8% discount rate and the terminal value balloons absurdly; the calculator will let you, but the market will not.
In most DCFs, more than half of the total value comes from the terminal value — the part of the forecast you know least about. That is not a flaw in this calculator; it is a property of the method, and it is why professionals treat DCF outputs as a range, not a number. A useful habit: run the model three times — pessimistic, base, optimistic — and see whether today’s price fits anywhere inside the range. If a stock only looks cheap when every input is generous, it is not cheap.
| Input | Typical range | Effect of raising it |
|---|---|---|
| FCF growth | 3–15%/yr | Value rises quickly |
| Discount rate | 8–12% | Value falls sharply |
| Terminal growth | 2–3% | Value rises — dangerously fast near the discount rate |
| High-growth years | 5–15 | More of the value shifts into the explicit forecast |
Reality check: garbage in, gospel out. A DCF is only as good as its assumptions, and small input changes swing the result by 30–50%. This simplified model also ignores net debt and dilution — a full analysis subtracts debt and adds cash before dividing by shares. Educational tool only — not financial advice.
Cross-check a DCF with simpler yardsticks: the Graham Number for an asset-and-earnings view, the P/E ratio and PEG ratio for market-relative pricing, and the present value calculator to build intuition for discounting itself. New to the concepts? Start with the time value of money.
Last updated July 2, 2026 · Written by Mustafa Bilgic. Educational only — not financial advice.
A discounted cash flow calculator estimates what a company is worth today by projecting its future free cash flows and discounting them back to the present at a required rate of return.
A common starting point is 8-12% for established companies — roughly the long-run return investors demand from stocks — with higher rates for riskier or smaller businesses.
Terminal value captures all cash flows beyond the explicit forecast, assuming a constant slow growth rate forever. It is usually calculated as final-year FCF × (1+g) ÷ (discount rate − g).
Because discounting compounds: a one-point change in the discount rate or terminal growth alters every future year at once. That sensitivity is why DCF results are best treated as a range.
No — for simplicity it values the cash flow stream and divides by shares. A full enterprise-value DCF subtracts net debt before arriving at equity value per share.