Value a business using discounted cash flow: project free cash flows, discount them at your required rate, add a terminal value, and derive enterprise and equity value.
Données vérifiées · July 2026
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The DCF method projects free cash flows over an explicit forecast horizon, discounts each one back to today at your chosen discount rate, and adds a terminal value (Gordon growth model) capturing everything beyond the forecast period. Subtracting net debt from the resulting enterprise value gives the equity value attributable to shareholders.
Projected cash flows of £100k, £110k, £120k, £130k and £140k over 5 years, discounted at 10% with 2% terminal growth and zero net debt, give an enterprise value of roughly £1.66m.
Enter your projected free cash flows, one per year, separated by commas.
Set the discount rate (your required rate of return or cost of capital) and the long-run terminal growth rate.
Add net debt to convert from enterprise value to equity value.
Read the discounted value of the explicit cash flows, the terminal value, and the resulting enterprise and equity value.
Last data update
July 7, 2026
Sources and references
Damodaran, A. — Investment Valuation (DCF method, terminal value); Brealey, Myers, Allen — Principles of Corporate Finance, 2025/26.
The data in this calculator is updated regularly to reflect the latest official rates. When in doubt, consult the official sources listed above.
The Gordon growth model breaks down mathematically (the denominator turns zero or negative), so no terminal value can be calculated — only the discounted explicit cash flows are used.
It's less reliable — future cash flows are uncertain and the terminal value often makes up more than 70% of the total valuation. Always cross-check with other methods such as comparable multiples.