DCF Calculator
Fair value per share from projected free cash flow, with a warning when the answer depends too heavily on the terminal assumption.
Projected free cash flow and its present value
Value today is the present value of 10 forecast years plus a terminal value using the Gordon growth formula. The output swings enormously on small input changes: raising the discount rate one point or cutting terminal growth half a point can move fair value 20% or more. Treat it as a way to test whether today's price requires believable assumptions, not as a price target.
A discounted cash flow model says a business is worth the cash it will produce, discounted back to today. Free cash flow grows at your assumed rate through the forecast window, then forever at a terminal rate. The terminal value uses the Gordon growth formula, which requires the discount rate to exceed terminal growth; otherwise the series diverges and the model has no answer.
Frequently asked questions
What discount rate should I use?
The weighted average cost of capital for the business, or your own required return. Many investors use 8% to 12% for established companies and higher for riskier ones. The rate should rise with uncertainty, since it is compensating you for it.
What terminal growth rate is reasonable?
Below long-run GDP growth, so roughly 2% to 3%. Any company growing faster than the economy forever would eventually become the entire economy, which is why a higher figure quietly breaks the model.
Where do I find free cash flow?
The cash flow statement in any 10-K or 10-Q: operating cash flow minus capital expenditures. Our company research pages compute it directly from SEC filings across a company's full history, which also shows whether the base year is representative.
Why do two analysts get different values?
Because small assumption changes compound. A DCF is a framework for making assumptions explicit, not a machine for producing a correct number. Its best use is inverting the question: what growth would justify today's price, and is that believable?
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.