Discount five years of projected free cash flow, add a perpetuity-growth terminal value, and optional per-share value. Runs in your browser. Free tools hub. PPC Budget Calculator for acquisition scenarios.
Often WACC for enterprise DCF; must exceed terminal growth.
Long-run growth in perpetuity (Gordon model).
About this tool
Discounted cash flow (DCF) analysis estimates the intrinsic value of a business, project, or asset by forecasting the cash it is expected to generate and translating those future amounts into today’s dollars using a discount rate that reflects risk and the time value of money. In professional finance, DCF is often described as the gold standard of intrinsic valuation because it forces explicit assumptions about growth, profitability, reinvestment, and horizon risk rather than hiding them inside a single market multiple. That transparency is also why thoughtful practitioners pair DCF outputs with sanity checks from comparable companies and from recent transactions—no model is better than its cash-flow forecasts or its cost of capital.
This free SynthQuery DCF Calculator runs entirely in your browser. You enter projected free cash flows (or any cash proxy you choose to model) for years one through five, a discount rate percentage, and a long-run terminal growth rate. The tool discounts each year’s cash flow to present value, applies a Gordon growth perpetuity at the end of year five to estimate terminal value, discounts that terminal value back to today, and sums the pieces into enterprise value. Optionally provide shares outstanding to translate enterprise value into an illustrative per-share value. Results include a detailed present-value table, a waterfall-style visualization of how each period contributes to enterprise value, and a sensitivity grid that varies discount rate and terminal growth around your inputs so you can see how fragile or robust a headline number is.
Because the calculator is educational and simplified—five explicit years, one terminal method, no balance-sheet bridge to equity value—it fits brainstorming, coursework, interview practice, and internal memos more than binding fairness opinions or tax filings. Start from the free tools hub at /free-tools when you want adjacent utilities, and use the PPC Budget Calculator at /ppc-budget-calculator when acquisition-driven growth assumptions feed the cash flows you are discounting.
What this tool does
The five-year explicit forecast window matches how many internal models are summarized for executive dashboards: enough to show a growth path without pretending you can see decades in detail. Each year discounts separately, which makes classroom verification easy and helps you explain timing effects when earlier cash is worth more than distant cash at the same nominal dollar amount.
Terminal value via perpetuity growth closes the model after year five using the standard Gordon formula. The tool reports both the undiscounted terminal value at the horizon and its present value so you can reconcile with textbooks and audit whether the terminal piece exploded relative to the explicit period. That split is critical in diligence when a single giant terminal lump signals over-concentrated assumptions.
The waterfall visualization stacks each period’s present value contribution so you see the build-up to enterprise value, with a cumulative line overlay for quick reading in meetings. It is not a substitute for full financial-statement waterfalls that reconcile revenue to cash, but it is ideal for teaching how DCF pieces assemble.
Sensitivity analysis is built as a five-by-five grid around your discount and growth inputs: discount shifts by whole percentage points and growth by half-point steps in the implementation shipped with this page. Cells invalidate when the discount rate is non-positive or no longer exceeds growth, which is mathematically required for convergent perpetuity—those cells display an em dash rather than a misleading number.
Optional per-share output supports equity conversations when you already think in enterprise value and have a clean share count in mind. Privacy matches other SynthQuery financial utilities: your projections stay local unless you copy them elsewhere.
Technical details
For each year t from one to five, present value equals cash flow in year t divided by (one plus r) raised to the tth power, where r is the discount rate expressed as a decimal. The sum of those present values is the explicit-period contribution to enterprise value in this simplified setup.
Terminal value at the end of year five uses the perpetuity growth form: TV equals CF5 times (one plus g) divided by (r minus g), where g is terminal growth as a decimal. The present value of terminal value equals TV divided by (one plus r) to the fifth power because the terminal value is taken as of the end of the explicit window. Enterprise value is the sum of explicit present values plus the present value of terminal value.
WACC is the customary discount rate for unlevered firm cash flows: it blends after-tax cost of debt and cost of equity using target capital structure weights. This page does not estimate betas, risk-free rates, or credit spreads—you must supply a coherent r. When you instead model levered equity cash flows, discount with cost of equity and solve for equity value directly; mixing definitions breaks the bridge between enterprise and equity value.
An alternative terminal method common in banking is the exit multiple approach: multiply a terminal-year metric such as EBITDA by a comparable multiple instead of using perpetuity growth. That method embeds market sentiment in the terminal piece; the Gordon model embeds long-run growth and spread assumptions. Many professionals show both side by side—this tool implements Gordon growth for clarity and reproducibility in a short form factor.
Use cases
Investment analysts use DCF to triangulate price targets with multiples and to document assumption transparency for research clients. This calculator is a lightweight scratch pad for structure and sensitivity—not for publishing price targets without a full model, but excellent for sanity-checking whether a terminal growth tweak moves implied value more than fixing year-two capex.
Corporate development and strategy teams evaluate internal projects and M&A targets by comparing discounted cash flows to strategic option value and synergies. When you are in early screening, typing five representative years plus a terminal assumption can answer whether a target is even in the right ballpark before consultants build a fifty-tab workbook.
M&A due diligence still relies on quality of earnings, working capital normalization, and legal reps far more than any browser tool, yet quick DCF sketches help align buyers and sellers on vocabulary—especially when one side speaks in EBITDA multiples and the other in present value.
Startup founders and seed investors sometimes contrast venture-style milestones with a stylized DCF to discuss exit multiples versus fundamentals. The model is imperfect for early-stage firms with binary outcomes, but it still teaches how discount rates encode required returns.
Internal FP&A teams bridge budgeting tools to valuation conversations by exporting forecast cash and testing discount rates that match treasury or investment-committee guidance. Pair this page with the ROI Calculator at /roi-calculator for project returns and with the Compound Interest Calculator at /compound-interest-calculator when you want compounding intuition adjacent to discounting math.
How SynthQuery compares
DCF, comparable company analysis, and precedent transactions answer overlapping questions with different data demands. DCF is forward-looking and assumption-heavy; comps and deals are market-anchored and backward-looking. Professional valuations often triangulate rather than choosing one church.
Aspect
SynthQuery
Typical alternatives
Core question
This DCF page asks: what is implied value if these cash flows and discount assumptions hold?
Comparable company analysis asks: what do public multiples imply today? Precedent transactions ask: what did buyers pay in similar deals?
Data burden
You supply five cash figures plus two rates; the tool does transparent present value arithmetic locally.
Full comps screens need peer universes, LTM adjustments, and corporate actions; deal databases need cleaned transaction terms.
Sensitivity
Built-in grid shows how enterprise value moves with discount and terminal growth around your inputs.
Multiples move daily with markets; transaction comps age quickly and may not reflect your buyer universe.
When to still hire experts
Use SynthQuery for education and quick sketches; hire bankers, appraisers, and counsel for fairness opinions, purchase agreements, and tax valuations.
Professionals add legal adjustments, working capital pegs, synergy models, and defensible WACC builds this page omits.
How to use this tool effectively
Step one: define what “cash flow” means for your scenario. In corporate finance textbooks, unlevered free cash flow to the firm is common for enterprise DCF: it is the cash available to all providers of capital after operating expenses, taxes, and reinvestment in working capital and capital expenditures. Practitioners sometimes instead paste management-adjusted EBITDA less capex, or simplified owner cash for small businesses. The important part is consistency—do not mix levered after-debt cash with an unlevered discount rate without reconciling definitions.
Step two: enter projected amounts for years one through five in dollars. For a SaaS company example, you might load a bottoms-up plan: start from net new annual recurring revenue, apply a steady-state free-cash-flow margin once the model reaches efficiency, and subtract modeled capex for data infrastructure. For a traditional manufacturing business, tie each year to capacity utilization, working capital swings around inventory, and maintenance capex rather than assuming a flat percentage of revenue forever. If year five still looks like a transition year, consider smoothing inputs in a spreadsheet first, then paste rounded figures here for communication.
Step three: choose a discount rate percentage. Many enterprise models use weighted average cost of capital (WACC) as the discount rate when cash flows are unlevered to the firm; equity-only models discount dividends or levered flows with cost of equity. This tool does not compute WACC for you—you supply the rate—so document whether your number is WACC, a hurdle rate, a venture expected return, or a round-number teaching assumption.
Step four: choose a terminal growth rate percentage. The calculator applies the Gordon growth model at the end of year five: terminal value equals year-five cash flow grown once by g, divided by (r minus g), where r and g are the discount and growth rates in decimal form. That requires r greater than g, which the tool enforces. Long-run g is often anchored near expected inflation plus real GDP growth for mature firms, but startups and turnarounds may need lower near-term plans before a terminal assumption is credible.
Step five: optionally enter shares outstanding if you want an indicative value per share. Remember enterprise value is not equity value until you adjust for net debt, preferred stock, minority interests, and non-operating assets the way a full bridge would. This page divides enterprise value by shares for a quick teaching shortcut only.
Step six: click Calculate. Read the present value table before staring at enterprise value—large terminal present value often means your assumptions dominate the outcome. Study the waterfall chart to see whether years one through five or the terminal lump drives value. Scan the sensitivity grid: wide swings across small rate changes signal you should narrow your assumption band or gather better forecasts.
Step seven: use Copy results once definitions are aligned with teammates, then paste into email, Notion, or slide appendices. Reset returns sample defaults. When you compare multiples-based heuristics to this income approach, open the Business Valuation Calculator at /business-valuation-calculator; when you normalize earnings before interest, taxes, depreciation, and amortization from financial statements, use the EBITDA Calculator at /ebitda-calculator.
Limitations and best practices
Treat every output as illustrative. Real enterprise value bridges start from DCF to equity by adjusting for cash, debt, preferred stock, options, warrants, non-controlling interests, and non-operating assets. This calculator skips those layers so the math stays approachable—do not quote per-share values in filings without a full bridge.
Document whether cash flows are unlevered or levered and whether your discount rate matches that choice. Mismatched pairs are among the most common spreadsheet errors in finance interviews and on the job.
Challenge terminal growth that exceeds long-run nominal GDP expectations unless you have a durable moat story—and even then, sensitivity tables exist to humble you. If perpetuity math feels too aggressive, rebuild terminal value using an exit multiple in another tool and compare.
Refresh assumptions when macro rates move materially; discount rates from last year’s environment may no longer be credible. Pair this page with the free tools hub at /free-tools for related calculators and bookmark the PPC Budget Calculator at /ppc-budget-calculator when marketing spend drives the revenue path inside your forecasts.
Estimate funding needs and burn context before you stylize early-stage cash flows.
Frequently asked questions
For enterprise DCF with unlevered free cash flows, practitioners often start with WACC: a weighted blend of after-tax cost of debt and cost of equity using capital structure weights that reflect how the company finances itself over the long run. Cost of equity frequently comes from models such as CAPM—risk-free rate plus beta times equity risk premium—while cost of debt reflects borrowing yields and tax shields. For private companies, discount rates may include size premiums and company-specific risk adjustments when data supports them. This calculator simply applies the percentage you type, so write down your rationale: teaching example, hurdle rate from the investment committee, or a round sensitivity anchor. If your cash flows are after debt service (levered), match them with cost of equity instead of WACC or you will double-count financing effects.
In the Gordon growth form used here, terminal value explodes when growth approaches the discount rate, which is why the tool requires the discount rate to exceed terminal growth. Many mature, developed-market businesses anchor long-run nominal growth near expected inflation plus modest real growth, unless you can defend a higher sustainable growth from reinvestment and returns. High-growth tech narratives sometimes justify elevated explicit-period forecasts, but pushing perpetual growth far above GDP forever creates fairy-tale valuations. When you doubt perpetuity, cross-check with an exit-multiple terminal model in a spreadsheet—EBITDA or revenue multiples at horizon—and compare whether the implied multiple looks like market history. If sensitivity shows most value sits in terminal value, spend more time justifying year-five cash quality and normalizations.
DCF is only as good as cash-flow forecasts, which are inherently uncertain for cyclical firms, early-stage companies, and businesses undergoing restructuring. Small changes to discount rate or terminal growth can swing present values dramatically—your sensitivity table is there to make that visible, not to pretend stability. DCF also struggles when strategic or real options dominate, such as platform expansion rights or patent cliffs, unless you layer optionality models elsewhere. Finally, this simplified page omits net debt, working capital pegs, and non-operating assets, so enterprise value here is a teaching aggregate, not an equity price ready for a term sheet.
WACC equals the sum of (weight of debt times after-tax cost of debt) plus (weight of equity times cost of equity), using market values where possible. After-tax cost of debt is typically pre-tax yield times (one minus the marginal tax rate) when interest is tax-deductible as modeled. Cost of equity often starts from a risk-free rate, adds an equity risk premium scaled by beta, and may add size or company-specific premiums. Weights should reflect target capital structure for valuation—not necessarily yesterday’s book ratios—unless you are normalizing a distressed path. SynthQuery does not fetch live yields or estimate betas inside this DCF page; enter a WACC you have already justified or use round numbers for classroom drills.
Perpetuity growth ties terminal value to fundamentals—long-run growth and the spread between discount rate and growth—and is easy to audit in formulas like the one this calculator implements. Exit multiples embed what the market is paying today for comparable businesses, which can be helpful when you believe pricing mean-reverts to trading comps. Many professionals present both: if perpetuity implies an EBITDA multiple far above observable transactions, you revisit growth or discount assumptions; if exit multiples imply growth far above macro plausibility, you revisit the multiple. This page ships perpetuity growth for transparency; export numbers and layer multiples externally when you need both stories.
Headline output is enterprise value-style: discounted operating cash flows plus discounted terminal value, without subtracting debt or adding excess cash. Optional per-share value divides that enterprise-style total by shares for a teaching shortcut only. To move from enterprise value to equity value in practice, subtract debt-like items, add non-operating cash, adjust for preferred stock and non-controlling interests, and account for options and warrants—often with a detailed bridge table. If you need a quick multiples-based range while you build the bridge, pair outputs with the Business Valuation Calculator for heuristic bands.
The mathematics allows negative projected cash flows—present values can be negative—and the tool will compute if your discount and growth assumptions remain valid for the terminal piece. However, applying a standard Gordon terminal to a distressed or pre-revenue path can mislead if year five is not a sensible normalization point. For loss-making years followed by an abrupt positive terminal, consider extending explicit forecasts in a spreadsheet until operations stabilize, or switch terminal methodology. Always narrate why the last explicit year is representative enough to capitalize into perpetuity.
ARR and MRR multiples are fast market heuristics that encode growth, retention, and margin expectations in one number. DCF forces those expectations into cash timing, churn, expansion, and reinvestment. Strong SaaS models often show high early reinvestment with deferred free cash flow; a naive multiple might still look rich while DCF explains the value of future cohorts. Use multiples for comparables discipline and DCF for cash timing and sensitivity—together they reduce blind spots. When you normalize subscription revenue into EBITDA-like measures, the EBITDA Calculator can help align definitions before you forecast cash.
No. Like other client-side financial utilities on SynthQuery, this DCF calculator performs arithmetic in your browser tab. Numbers you type stay on your device unless you use Copy results and paste them elsewhere. That posture helps when you are under NDA or screen-sharing with clients. It also means you should save important scenarios yourself—there is no cloud sync of your model.
Internal rate of return solves the discount rate that sets net present value to zero for a cash-flow stream—useful for project comparison—while DCF here holds discount rate fixed and solves for present value. Compound annual growth rate expresses a smooth growth path between two endpoints; it complements but does not replace discounted valuation. Payback period highlights liquidity timing—how fast cash returns—without fully capturing time value unless you use discounted payback. SynthQuery offers the ROI Calculator and Compound Interest Calculator for related intuition, the Break-Even Calculator for operating payback thinking, and the Loan Amortization Calculator for debt schedules; dedicated IRR or payback widgets may appear on the free tools hub over time as the catalog grows.