Business Valuation - Discounted Cash Flow Calculator
This tool calculates a business valuation based upon the discounted cash flow methodology - illustrating how changes in projected growth rates and capital assumptions impact the business Net Present Value.
How the business valuation - discounted cash flow calculator works
It projects the business’s cash flow forward at your growth rate, discounts each year back to today at your required return, and adds a discounted terminal value for everything beyond the projection. The sum is the estimated enterprise value.
Worked example: with annual cash flow (year 1) of $200,000, annual cash flow growth of 5.00% and discount rate (required return) of 12.00%, the business valuation (discounted cash flow) calculator shows estimated business value of $2,195,020.
- PV of projected cash flow
- $788,010
- PV of terminal value
- $1,407,010
- Enterprise value
- $2,195,020
- Implied multiple
- 11.0×
| Annual cash flow (year 1) | Estimated business value |
|---|---|
| $100,000 | $1,097,510 |
| $200,000 | $2,195,020 |
| $400,000 | $4,390,041 |
| $800,000 | $8,780,082 |
The formula
Value = Σ [cash flowₜ ÷ (1 + d)ᵗ] + terminal value ÷ (1 + d)ⁿ, where terminal value = final cash flow × (1 + g) ÷ (d − g).
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the business valuation - discounted cash flow calculator
What is discounted cash flow valuation?
A method that values a business as the present value of all the cash it is expected to generate in the future, discounted at the return an investor requires.
Why does the terminal value matter so much?
It captures the business’s worth beyond the forecast period and often makes up most of the value. Small changes in the discount or terminal-growth rate move it a lot.
What discount rate should I use?
The required rate of return for the risk involved — often a weighted average cost of capital. Higher risk means a higher discount rate and a lower valuation.
Is the Business Valuation - Discounted Cash Flow Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.