DCF Valuation Calculator

How to calculate Intrinsic Value?

DCF valuation sums the present value of all future cash flows, including a terminal value representing all years beyond the projection period.

Formula: Enterprise Value = Σ [FCF_n / (1+r)^n] + [Terminal Value / (1+r)^n]

Using the DCF calculator: an example

Example: A company with $1M Initial FCF, 10% Growth Rate, and a 8% Discount Rate.

Step-by-step calculation:

1. Project annual FCF for the next 5 years based on the 10% growth rate.
2. Calculate the Terminal Value using the Perpetual Growth model.
3. Discount all future values back to today's dollars using the 8% WACC.
4. Add cash and subtract debt to reach the Equity Value per share.

Frequently Asked Questions

What is WACC?

The Weighted Average Cost of Capital represents the average rate a company pays to finance its assets, used as the discount rate.

What is a Terminal Growth Rate?

It is the constant rate at which a company is expected to grow forever, usually capped at the long-term GDP growth rate.

Why is DCF important?

It focuses on cash generation rather than accounting profits, providing a fundamental 'check' against market prices.