DCF Calculator

Enter Calculation

Initial Cash Flow:

Growth Rate (%):

Discount Rate (%):

Number of Years:

Results

Year	Cash Flow	Discount Factor	Present Value
1	$1,050.00	0.9091	$954.55
2	$1,102.50	0.8264	$911.16
3	$1,157.63	0.7513	$869.74
4	$1,215.51	0.6830	$830.21
5	$1,276.28	0.6209	$792.47

Total Present Value: $4,358.12

Note: The Total Present Value represents the sum of all discounted cash flows, indicating the estimated value of the investment or project today, based on future cash flows and the given discount rate.

What the DCF Calculator Does

The Discounted Cash Flow (DCF) Calculator estimates the present value of a stream of cash flows that grow at a steady rate each year. It is widely used in finance and valuation around the world to answer one question: what is a series of future cash flows worth in today's money? Because money received later is worth less than money today, each year's cash flow is "discounted" back to the present using a discount rate.

Each future cash flow is discounted back to its value today and summed.

The Inputs You Enter

• Initial Cash Flow – the base amount (CF₀) the cash flow grows from.
• Growth Rate (%) – how much the cash flow increases each year (g).
• Discount Rate (%) – your required return or cost of capital used to discount future amounts (r).
• Number of Years – how many years (n) of cash flows to include.

The Formula

The calculator sums the discounted value of each year's grown cash flow:

DCF = Σ [ CF₀ × (1 + g)ᵗ ] / (1 + r)ᵗ, for t = 1 to n.

For each year it first grows the cash flow by (1 + g)ᵗ, then multiplies by a discount factor of 1 / (1 + r)ᵗ. Adding up all the yearly present values gives the total present value.

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Growth increases the numerator while discounting shrinks the denominator each year.

Worked Example

Suppose Initial Cash Flow = 1,000, Growth Rate = 5%, Discount Rate = 10%, over 3 years.

• Year 1: 1,000 × 1.05 = 1,050; ÷ 1.10 = 954.55
• Year 2: 1,000 × 1.05² = 1,102.50; ÷ 1.10² = 911.16
• Year 3: 1,000 × 1.05³ = 1,157.63; ÷ 1.10³ = 869.74

Total present value ≈ 2,735.45. So three growing cash flows totalling 3,310.13 in nominal terms are worth about 2,735 today.

Frequently Asked Questions

Why is the discount rate so important? It reflects risk and opportunity cost. A higher discount rate shrinks future cash flows more, lowering the total present value; a lower rate raises it.

What if growth exceeds the discount rate? The calculator still computes each year correctly, but values won't shrink as quickly. Over many years, persistently g > r produces very large totals, which is usually unrealistic for long horizons.

Does this include a terminal value? No. This tool sums only the explicit years you enter. For a full company valuation you would typically add a separate terminal value beyond the final year.