Free Tools Discounted Cash Flow Calculator

A Discounted Cash Flow (DCF) Calculator is a financial tool used to estimate the current value of an investment, business, stock, or project based on the cash it is expected to generate in the future.

The idea behind DCF is that money today is worth more than the same amount of money in the future because today’s money can be invested and earn a return.

Core Formula

The DCF method discounts future cash flows back to their present value:

$PV = \frac{FV}{(1 + r)^n}$PV=(1+r)nFV​

$PV=\frac{\text{\$100.00}}{(1+0.08)^{5}}=\text{\$68.06}$PV=(1+0.08)5$100.00​=$68.06

$r$r

%

$n$n

yrToday5 years later$68.06$100.00PV (present value)FV (future value)8% discount rate

How It Works

You estimate:

1. Future cash flows (e.g., profits, dividends, rental income)
2. Discount rate (required rate of return)
3. Number of years

The calculator then:

• Discounts each future cash flow to today’s value.
• Adds all discounted cash flows together.
• Produces the total present value of the investment.

Example

Suppose you expect to receive:

• $10,000 in 1 year
• Discount rate = 8%

Present Value:$$PV=\frac{10,000}{(1+0.08)^1}$$PV=(1+0.08)110,000​$$PV \approx \$9,259$$PV≈$9,259

This means receiving $10,000 one year from now is equivalent to about $9,259 today if your required return is 8%.

Multi-Year DCF Example

Expected cash flows:

Year	Cash Flow
1	$10,000
2	$12,000
3	$15,000

Discount rate: 10%

The DCF calculator discounts each year’s cash flow and sums them:$$DCF = \frac{10,000}{1.10} + \frac{12,000}{1.10^2} + \frac{15,000}{1.10^3}$$DCF=1.1010,000​+1.10212,000​+1.10315,000​

The result is the estimated present value of those future cash flows.

Common Uses

• Stock valuation
• Business valuation
• Real estate investment analysis
• Capital budgeting
• Project evaluation
• Startup valuation

What a DCF Calculator Typically Requires

• Initial investment (optional)
• Future cash flows
• Discount rate
• Growth rate (optional)
• Terminal value (optional for long-term valuations)

Why Investors Use DCF

A DCF calculator helps answer:

“What is this investment worth today based on the money it is expected to generate in the future?”

If the DCF value is higher than the current purchase price, the investment may be undervalued. If it’s lower, the investment may be overvalued.