Discounted Cash Flow Calculator

Enter a discount rate, projected yearly cash flows, and a terminal growth rate to calculate a discounted cash flow valuation.

How to Use the Discounted Cash Flow Calculator

Set the discount rate and terminal growth rate, choose how many years to project (the row count updates to match), fill in each projected year's cash flow, and the tool values both the projection period and everything beyond it.

Unlike a straight NPV calculation, there's no upfront outflow to subtract here — this tool is built for valuing a business or an asset from its cash flows alone, the way an analyst would size up what a company is worth rather than whether one project clears its hurdle rate.

Two Formulas, Stitched Together

The projection years get discounted individually and summed:

PV of Cash Flows = Σ [CFₜ ÷ (1 + r)ᵗ]  for t = 1 to n

Everything after the last projected year is compressed into a single terminal value using the Gordon growth relationship, then discounted back to today from year n:

Terminal Value = CFₙ × (1 + g) ÷ (r − g)
PV of Terminal Value = Terminal Value ÷ (1 + r)ⁿ

g is the terminal growth rate and r the discount rate, both as decimals. Add the two present values together for the full valuation:

DCF Value = PV of Cash Flows + PV of Terminal Value

Why Growth Has to Stay Below the Discount Rate

If the terminal growth rate ever reaches or exceeds the discount rate, the denominator (r − g) hits zero or goes negative and the terminal value formula stops meaning anything — mathematically it implies a business growing forever faster than money is being discounted, which never resolves to a finite number. The calculator blocks that combination outright rather than returning a nonsense figure.

The Terminal Value Usually Dominates

For a five-year projection, the terminal value typically accounts for the majority of the total DCF figure — sometimes 60-80% of it — which is worth sitting with for a second, because it means the number you get is driven more by a single growth-rate assumption about the indefinite future than by the five years of detailed projections sitting above it. Small changes to the terminal growth rate move the total more than most people expect.

Five years of $20,000 at a 10% discount rate, with 2.5% terminal growth, prices out to about $75,816 for the projected years and roughly $169,718 for everything after — a combined value near $245,534, better than two-thirds of it riding on the terminal assumption alone. Nudge the terminal growth rate from 2.5% up to 4% and the total jumps past $280,000, even though nothing about the five actual projected years changed.

Business Valuation, Not Project Screening

NPV asks whether one project clears a hurdle; this asks what an ongoing, growing thing — a company, a rental portfolio, a royalty stream — is worth in total today, including the part of its life that never gets individually projected. That's the practical difference between the two tools on this site, beyond the missing upfront outflow.