DCF Calculator
Estimate the value of a business or project by discounting its projected cash flows and terminal value. Run a full DCF model in seconds.
DCF value
₹1,66,18,442
Present value of flows + terminal value
Terminal value
₹2,09,36,630
Year 5 cash flow: ₹16,10,510
PV of explicit flows
₹47,38,436
At 12% discount rate
DCF estimates what a business is worth by discounting its future cash flows. The terminal growth rate must stay below the discount rate — otherwise the model cannot be solved.
Last updated: August 2026
How this calculator is verified
Checked by True Calculator automated test suite on
- Formula verified against a published worked example in the automated test suite
- Edge cases (zero, negative, boundary and unit-mismatch inputs) covered by unit tests
The full verification method is on our how we verify page. Found an error? Tell us and we will re-check it.
When to Use This Calculator
DCF answers the fundamental question of what a cash-generating asset is worth today. Investors screening Indian stocks use it to compare a company's intrinsic value with its market price — buying when the market price sits below the DCF estimate. Founders preparing for a funding round use DCF alongside revenue multiples to anchor their valuation conversations, and acquirers valuing a target business run the same model before making an offer. Franchise buyers discount the projected earnings of a franchise unit, and landlords considering a long-term commercial lease can value the rental stream. Because the model isolates growth, margin and discount assumptions, it also shows exactly which lever — faster growth or cheaper capital — moves a business's value the most, making it a planning tool as much as a valuation one.
How to Use This Calculator
- Step 1: Enter the current annual free cash flow of the business or project.
- Step 2: Enter the growth rate expected for the projection years.
- Step 3: Enter the discount rate — typically the WACC — and the long-run terminal growth rate.
- Step 4: Enter the projection period in years and read the DCF value, which includes the terminal value.
Worked Example
A Hyderabad entrepreneur's firm generates ₹10,00,000 of free cash flow, expected to grow 10% yearly for 5 years. Discounting at 12% — the firm's WACC — the five projected flows contribute ₹47,38,436 in present value, with the final year's flow reaching ₹16,10,510. The terminal value, assuming 4% growth forever, is ₹2,09,36,630, and its discounted present value brings the total DCF value to ₹1,66,18,442. Note how the terminal value dominates the answer, which is why the terminal growth assumption deserves careful thought.
Tips and Common Mistakes
- •Tip 1: Keep the terminal growth rate 2–4% for mature businesses; anything near the discount rate inflates the value.
- •Tip 2: Stress-test with a lower growth and higher discount rate to get a valuation range, not a single point.
- •Tip 3: Use free cash flow, not accounting profit — depreciation and working capital changes distort profit-based estimates.
- ✗Mistake 1: Setting the terminal growth rate at or above the discount rate — the model cannot be solved and returns no result.
- ✗Mistake 2: Using one aggressive growth rate for the whole projection; most businesses slow down as they scale.
Frequently Asked Questions
What is DCF valuation used for?
DCF estimates the intrinsic value of a business, project or asset by discounting its future cash flows to today's rupees. Indian investors use it to check whether a stock is undervalued before buying, and founders use it to negotiate valuation.
Why is the terminal value so large in DCF?
The terminal value captures all cash flows beyond the projection period, which often dominate the valuation. In a typical 5-year model, the terminal value is frequently 60–80% of the total, so the terminal growth assumption deserves serious thought.
What happens if the terminal growth rate equals the discount rate?
The Gordon growth formula divides by the difference between the discount rate and terminal growth, so the model cannot be solved when they are equal. Terminal growth must always stay below the discount rate — a common rule is 2–4% for mature markets.
Is DCF accurate for young Indian startups?
It is very sensitive to assumptions — growth, margin, discount rate and terminal growth all move the answer sharply. For loss-making startups, DCF is best used as a range check alongside revenue multiples, not as a precise number.
What is a free cash flow in this calculator?
Free cash flow is operating cash flow minus capital expenditure — the cash actually available to repay debt and pay owners. For a small business, a practical proxy is net profit plus depreciation minus equipment purchases.
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