DCF Calculator
Estimate discounted cash flow value, terminal value, and present value of forecast cash flows with WealthCalcLab.
Updated April 10, 2026
What this calculator does
This DCF calculator estimates the present value of future cash flows and a terminal value using a discount rate and long-run growth assumption.
DCF is one of the most useful valuation frameworks because it forces assumptions about cash generation, timing, and required return into a single structured model.
It is also highly sensitive to inputs, so the real value of the calculator is often in scenario testing rather than in one precise-looking output.
This page is built for users who need a defensible planning answer, not just quick arithmetic. It translates "Year 1 cash flow", "Annual cash flow growth", and "Discount rate" into "DCF value", "Terminal value", and "Discounted terminal value" so the trade-off is visible in one place instead of being hidden behind a single number.
How to use it
Enter the expected first-year cash flow, forecast growth rate, discount rate, terminal growth rate, and projection horizon.
Check the discounted terminal value carefully because terminal assumptions can dominate the final valuation.
Compare multiple scenarios instead of relying on a single base case.
Start with "Year 1 cash flow", "Annual cash flow growth", and "Discount rate", then check whether the first output cards already answer your question. After that, add advanced assumptions such as "Terminal growth rate" only when they are real enough to change the decision.
Formula
PV = cash flow ÷ (1 + discount rate)^yearTerminal value = final cash flow × (1 + terminal growth) ÷ (discount rate - terminal growth)Enterprise value equals the sum of discounted forecast cash flows and the discounted terminal value.
Methodology
Cash flows are projected forward each year using the growth assumption, then discounted back to present value using the discount rate.
Terminal value is estimated using a Gordon-growth style perpetuity formula after the explicit forecast period.
The calculator requires the discount rate to exceed the terminal growth rate so the valuation remains mathematically stable.
The model maps "Year 1 cash flow", "Annual cash flow growth", and "Discount rate" into "DCF value", "Terminal value", and "Discounted terminal value" using the formulas shown on the page. Keeping those relationships visible makes it easier to separate the core economics from the optional adjustments and to understand which assumption is actually moving the answer.
Worked example
A business with strong near-term cash flow growth can still produce a modest DCF value if the discount rate is high or the terminal assumption is conservative.
That is why valuation work should focus as much on assumptions and ranges as on the headline result.
How to interpret the results
DCF value is the present value implied by your assumptions, not an objective market truth.
If discounted terminal value is most of the enterprise value, the model may be highly sensitive and worth stress testing further.
Read "DCF value" first, then use the other summary cards, the chart, and the detailed table to judge cash flow today and value creation over time. In most finance decisions, the best option is the one that stays strong across the full picture, not just the one with the most attractive first number.
Common mistakes
- Using a terminal growth rate that is too high relative to the discount rate.
- Treating a DCF output as precise despite highly uncertain assumptions.
- Ignoring how sensitive the model is to small changes in discount rate or terminal growth.
Key terms
Quick definitions for the finance terms that matter on this page.
Discount rate
The required return used to translate future cash flows into present value.
Terminal value
The value of cash flows expected beyond the explicit forecast period.
Frequently asked questions
Clear answers on assumptions, interpretation, and the limits of each estimate.
Why must discount rate exceed terminal growth?
Because otherwise the terminal value formula becomes unstable or mathematically invalid.
Is DCF best for every business?
Not always. It is strongest when cash flow can be estimated with reasonable structure.
Why does terminal value matter so much?
Because in many DCF models, a large share of total value comes from cash flows beyond the explicit forecast period.
Should I use revenue or cash flow?
DCF is built on cash flow, not revenue, because cash flow better reflects distributable economic value.
Which inputs change "DCF value" the most?
Start with "Year 1 cash flow", "Annual cash flow growth", and "Discount rate". Those assumptions usually drive "DCF value" far more than any optional adjustment. Once the base case is right, use advanced inputs only to reflect real fees, taxes, or timing differences.
What does "DCF value" tell me in practical terms?
"DCF value" is the fastest read on the outcome, but it should not be treated as the whole decision by itself. Use it as the headline number, then read the chart, table, and other summary cards to understand what is happening underneath.
Why should I look at "Terminal value" as well as "DCF value"?
Because "DCF value", "Terminal value", and "Discounted terminal value" answer different parts of the same decision. A scenario can look good on the first number and still be weak once timing, total cost, or long-run value is included.
When should I use "Terminal growth rate"?
Use "Terminal growth rate" when it materially changes the economics of the decision. If it is uncertain or optional, compare the base case with and without it rather than guessing once and trusting the result.
What happens if the advanced options stay at zero?
Then the calculator runs a simpler base case using the main inputs only. That is often the best place to start, because it makes it easier to see what changes once optional costs, fees, taxes, or adjustments are layered in.
Does the chart add anything beyond the summary cards?
Yes. The chart shows how the result develops over time, which is often the real decision point. It is especially useful when two scenarios have a similar headline result but very different timing or cost patterns.
What is the detailed table useful for?
Use the table when you need the period-by-period breakdown behind the summary. That is usually where users spot front-loaded interest, a slow payoff path, a contribution gap, or the exact point where one scenario becomes better than another.
Should I compare more than one dcf case?
Yes. A base case and one stressed case usually give a much better planning view than a single run. Change one major assumption at a time so you can see what is actually responsible for the difference.
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Important disclaimer
For Botswana, confirm local treatment of accounting treatment, tax assumptions, financing costs, and local compliance rules before using the output for a final application, filing, or contract decision.