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DCF Calculator

Note: If you already have Free Cash Flow (FCF) values, you can skip the first table and directly enter FCF in the second table. Basic arithmetic operations (+, -, *, /) work inside the cells.

Intrinsic Value Calculation
Sum of Present Values -
Cash & Cash Equivalent
Total Debt
Total Intrinsic Value -
Number of Outstanding Shares
Intrinsic Value Per Share -
Margin of Safety (%)
Buy Price (with Margin of Safety) -

Valuation Meter

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DCF Calculator: How to Calculate Intrinsic Value

What is DCF (Discounted Cash Flow)?

A Discounted Cash Flow (DCF) is a valuation methodology used to estimate a company’s intrinsic value by calculating the present value of its projected future cash flows. It determines the present value of projected future cash flows by applying a discount rate that accounts for:

The fundamental principle behind DCF is that a dollar today is worth more than a dollar in the future due to:

The DCF Formula

Present Value = Future Cash Flow / (1 + Discount Rate)^n

Where:

  • Future Cash Flow = Projected cash flow for a given year
  • Discount Rate = Required rate of return
  • n = Number of years into the future

    • Key DCF Formulas

    1. Present Value of Cash Flows

    PV of FCF = FCFYear n / (1 + r)n

    Where:

    2. Terminal Value Formula

    Terminal Value = FCFLast Year × (1 + g) / (r - g)

    Where:

    3. Present Value of Terminal Value

    PV of Terminal Value = Terminal Value / (1 + r)n

    Where:

    4. Total Intrinsic Value

    Intrinsic Value = Σ(PV of FCFs) + PV of Terminal Value + Cash - Debt

    5. Price Per Share

    Price Per Share = Intrinsic Value / Number of Shares Outstanding

    Note: All projected cash flows are discounted to present value using the discount rate (r) to account for the time value of money and risk.

    Purpose of DCF Analysis

    DCF analysis helps investors:

    How to Use This DCF Calculator

    Start Year and End Year Input

    Enter the years that you want to input cash flow for. For example:

    1. Historical Data Entry (2020-2025)

    The first table shows historical data and is calculated as follows:

    2. Growth Parameters Setup

    Example input and results:

  • Stage 1: 5 years at 15% growth
  • Stage 2: 5 years at 10% growth

    • This will generate cash flows for 10 future years:

    Note: If you want to use single growth rate, enter values for Stage 1 only

    The calculator uses a two-stage growth model for future projections.

    Stage 1 (High Growth Phase)

    If you enter:

    • Stage 1 Years: 5
    • Stage 1 Growth Rate: 15%

    Then:

    • Years 2026-2030 cash flows will grow at 15% annually
    • Each year's FCF = Previous Year FCF × (1 + 0.15)

    Stage 2 (Transition Phase)

    If you enter:

    • Stage 2 Years: 5
    • Stage 2 Growth Rate: 10%

      • Then:

      • Years 2031-2035 cash flows will grow at 10% annually
      • Each year's FCF = Previous Year FCF × (1 + 0.10)

      Additional Parameters

      Example Calculation

      If your last historical FCF (2025) is $1,000:

      Stage 1 (15% growth):

      Tips for Accurate Valuation

      Common Pitfalls to Avoid

      DCF Calculator: Frequently Asked Questions (FAQ)

      1. What is a DCF Calculator?

      Q: What does the DCF Calculator do?

      A: The DCF (Discounted Cash Flow) Calculator helps you estimate the intrinsic value of a company by projecting its future cash flows and discounting them back to their present value. It's a widely used valuation method in finance.

      Q: Why should I use a DCF Calculator?

      A: The DCF Calculator helps you determine whether a stock is overvalued or undervalued, allowing you to make informed investment decisions based on the company's fundamentals.

      2. How to Use the DCF Calculator

      Q: What inputs do I need?

      A: You need:

      • Historical Operating Cash Flow (OCF) and Capital Expenditures (CapEx)
      • Growth rates for future cash flows (Stage 1 and Stage 2)
      • Terminal growth rate (long-term sustainable growth)
      • Discount rate (required rate of return)
      • Cash, debt, and outstanding shares for equity valuation

      Q: How do I enter historical data?

      A: Enter the Operating Cash Flow (OCF) and Capital Expenditures (CapEx) for each year. The calculator automatically computes Free Cash Flow (FCF) as:

      FCF = OCF − CapEx

      3. Growth Rates and Projections

      Q: What is Stage 1 and Stage 2 growth?

      A:

      • Stage 1 Growth: Represents the high-growth phase (typically 5-10 years)
      • Stage 2 Growth: Represents the transition phase with slower growth

      Q: What is the Terminal Growth Rate?

      A: The terminal growth rate is the long-term sustainable growth rate (usually 2-3%). It's used to calculate the company's value beyond the projection period.

      4. Discount Rate

      Q: How do I choose the Discount Rate?

      A: Consider these factors:

      • Risk-free rate (e.g., government bond yields)
      • Company's risk profile (beta, industry risk)
      • Your personal required return

      Typical range: 8-12%

      5. Troubleshooting and Limitations

      Q: Why is my intrinsic value too high or low?

      A: Common reasons include:

      • Overestimating growth rates
      • Using an inappropriate discount rate
      • Incorrect historical data inputs

      Q: What are the limitations of the DCF model?

      A: The DCF model:

      • Relies heavily on growth and discount rate assumptions
      • Works best for stable companies with predictable cash flows
      • May not suit early-stage or highly volatile companies
      • Requires regular updates as new data becomes available