DCF Calculator
Calculate the fair value of investments using Discounted Cash Flow analysis
Calculate DCF Valuation
Free Cash Flow Projections
Financial Position
Share Information
DCF Valuation Results
Method used: Free Cash Flow to Firm (FCFF)
Formula: DCF = Σ(FCFF_t / (1+WACC)^t) + Terminal Value / (1+WACC)^n
Analysis & Interpretation
Example Calculation
Company Alpha (FCFF)
FCFF Year 1: $90,000
FCFF Year 2: $100,000
FCFF Year 3: $108,000
FCFF Year 4: $116,200
FCFF Year 5: $123,490
WACC: 9.94%
Growth: 4.48%
Results
Terminal Value: $2,363,047
Firm Value: $1,873,574
Net Debt: $800,000
Equity Value: $1,073,574
Fair Value/Share: $10.74
DCF Methods
FCFF Method
Uses projected free cash flows and terminal value to determine firm value
Best for: Established companies
EPS Method
Uses earnings per share with growth assumptions to find intrinsic value
Best for: Growth companies
Key Assumptions
WACC represents the cost of capital
Perpetual growth rate should be 2-3%
Cash flows should turn positive in terminal period
WACC must exceed perpetual growth rate
Understanding DCF Valuation
What is DCF Analysis?
Discounted Cash Flow (DCF) analysis is a valuation method that determines the fair value of an investment by analyzing the present value of expected future cash flows. It's based on the principle that money available today is worth more than the same amount in the future.
When to Use DCF?
- •Valuing companies with predictable cash flows
- •Long-term investment decisions
- •Merger and acquisition analysis
- •Capital budgeting decisions
FCFF Formula
DCF = Σ(FCFF_t / (1+WACC)^t) + TV/(1+WACC)^n
- FCFF: Free Cash Flow to Firm
- WACC: Weighted Average Cost of Capital
- TV: Terminal Value
- t: Time period
- n: Final projection period
EPS Formula
Intrinsic Value = Growth Value + Terminal Value
Advantages
- • Based on fundamental analysis
- • Considers time value of money
- • Comprehensive valuation method
- • Industry-standard approach
Limitations
- • Sensitive to assumptions
- • Requires accurate forecasting
- • Complex calculations
- • Not suitable for all companies
Best Practices
- • Use conservative assumptions
- • Perform sensitivity analysis
- • Compare with market multiples
- • Consider multiple scenarios