DCF Calculator (discounted cash flow value per share)

Understanding the discounted cash flow (DCF) calculator — concept and principle

This calculator values a company with a two-stage discounted cash flow model: free cash flow to the firm grows at one rate for a forecast period, then at a stable long-term rate forever. It gives the present value of the forecast cash flows and of the terminal value, enterprise value, equity value, value per share, the terminal value's share of the total and the implied EV-to-FCF multiple. Use it for equity research practice, corporate finance courses and testing valuation assumptions.

Three quarters of the value sits in the terminal value, so its growth and discount-rate assumptions matter most.

How it is calculated

FCF_t = FCF₀ × (1 + g)^t for t = 1 … N.
PV of forecast = Σ FCF_t ÷ (1 + WACC)^t.
Terminal value at year N = FCF_N × (1 + g_T) ÷ (WACC − g_T), discounted by (1 + WACC)^N.
Enterprise value (EV) = PV of forecast + PV of terminal value.
Equity value = EV − net debt; value per share = equity ÷ shares.

The principle

A business is worth the cash it will generate, discounted for time and risk. Free cash flow to the firm is cash available to all capital providers, so it is discounted at the weighted average cost of capital (WACC). Forecasting each year in detail is only possible for a few years; after that, the Gordon growth formula values all later cash flows as a growing perpetuity. Subtracting net debt leaves the value belonging to shareholders. The terminal growth rate should not exceed the long-run growth of the economy, and it must be below WACC.

Worked example

Default inputs: FCF 500, growth 8% for 5 years, terminal growth 2.5%, WACC 9%, net debt 1,200, 100 shares.

FCF years 1–5: 540, 583.2, 629.9, 680.2, 734.7; PV ≈ 2,432.
Terminal value at year 5 = 734.7 × 1.025 ÷ (0.09 − 0.025) ≈ 11,585; PV ≈ 11,585 ÷ 1.09⁵ ≈ 7,530.
EV = 2,432 + 7,530 ≈ 9,962.
Equity = 9,962 − 1,200 = 8,762.
Value per share = 8,762 ÷ 100 ≈ $87.62; terminal value is 75.6% of EV; EV ÷ current FCF ≈ 19.92×.

Each point is the calculator re-run with only “Shares outstanding” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Shares outstanding	Value per share
25	$350.46
50	$175.23
75	$116.82
100	$87.62
125	$70.09
150	$58.41
200	$43.81

How to read the result

Compare the value per share with the market price, but treat the result as a range, not a point: small changes in WACC or terminal growth move it a lot because the terminal value is three quarters of the total here. Run several scenarios. The implied multiple is a sanity check against comparable companies.

Common mistakes

Setting terminal growth close to or above WACC, which makes the value explode.
Discounting free cash flow to equity at WACC, or FCFF at the cost of equity.
Forgetting to subtract net debt.
Using optimistic growth for too many years.

Keep in mind: DCF results depend heavily on assumptions. This is an educational model, not investment advice.

Frequently asked questions

Why is the terminal value so large?

It covers all years after the forecast, often decades of cash flow, so it usually dominates the total.

What terminal growth rate is reasonable?

Usually no higher than long-run nominal economic growth, often a few percent.

What is the difference between enterprise value and equity value?

Enterprise value belongs to all capital providers; equity value is what remains for shareholders after net debt.

Sources: A. Damodaran, Investment Valuation, 3rd ed. (Wiley, 2012) · J. E. Pinto et al., Equity Asset Valuation, 4th ed. (CFA Institute / Wiley, 2020), Free Cash Flow Valuation

Checked 9 Nov 2026. Free-cash-flow-to-the-firm valuation with a stable-growth terminal value: A. Damodaran, “Investment Valuation”, 3rd ed. (Wiley, 2012), FCFF valuation and terminal value chapters; J. E. Pinto et al., “Equity Asset Valuation”, 4th ed. (CFA Institute / Wiley, 2020), Free Cash Flow Valuation.

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