# DCF Valuation Calculator

> Projects free cash flow at a constant growth rate for a number of years, discounts each year and a Gordon-growth terminal value at the discount rate, and reports enterprise value, equity value (after net debt) and value per share.

- Calculator id: `dcf-valuation` · Category: Investing & Real Estate (`investing`) · Tool name: `calculate_dcf_valuation`
- Canonical page: https://tttkmbb.com/investing/dcf-valuation · This document: https://tttkmbb.com/investing/dcf-valuation.md · JSON definition: https://tttkmbb.com/investing/dcf-valuation.json

## Purpose

Projects free cash flow at a constant growth rate for a number of years, discounts each year and a Gordon-growth terminal value at the discount rate, and reports enterprise value, equity value (after net debt) and value per share.

**Use when:** You want an intrinsic value of a company or project from its current free cash flow, a growth assumption, a discount rate (e.g. WACC) and a terminal growth rate.

**Do not use when:** Cash flows are irregular or already listed year by year (use npv), the company has negative free cash flow, or you want the rate of return of known flows (use irr). Informational only; not financial advice.

## Input

| Parameter | Type | Unit | Required | Description |
| --- | --- | --- | --- | --- |
| `current_free_cash_flow` | number |  | required | Most recent annual free cash flow (year 0) in currency units. (> 0, max 1000000000000000) |
| `growth_rate_percent` | number | % per year | required | Annual growth of free cash flow during the projection period. (min -50, max 100) |
| `projection_years` | integer | years | optional, default 5 | Number of explicitly projected years before the terminal value. (min 1, max 20) |
| `discount_rate_percent` | number | % per year | required | Required return or WACC used to discount the cash flows. (> 0, max 100) |
| `terminal_growth_percent` | number | % per year | required | Perpetual growth after the projection period; must be below the discount rate. (min -10, max 20) |
| `shares_outstanding` | number |  | optional | Optional share count for the value per share. (> 0, max 10000000000000) |
| `net_debt` | number |  | optional, default 0 | Debt minus cash, subtracted from enterprise value to get equity value (negative for net cash). (min -1000000000000000, max 1000000000000000) |

## Output

| Field | Type | Unit | Description |
| --- | --- | --- | --- |
| `pv_of_cash_flows` | number |  | Σ FCF_t / (1 + r)^t over the projection years. |
| `terminal_value` | number |  | FCF_N × (1 + g_terminal) / (r − g_terminal) at the end of year N. |
| `pv_of_terminal_value` | number |  | terminal_value / (1 + r)^N. |
| `enterprise_value` | number |  | pv_of_cash_flows + pv_of_terminal_value. |
| `terminal_value_share_percent` | number | % | pv_of_terminal_value / enterprise_value × 100 (high values mean the result depends mostly on the terminal assumptions). |
| `equity_value` | number |  | enterprise_value − net_debt. |
| `value_per_share` | number |  | equity_value / shares_outstanding (only when shares are given). |
| `cash_flows` | list |  | One row per year: year, fcf, discount_factor, present_value. |

## Formula

`FCF_t = current_free_cash_flow × (1 + g)^t; PV = Σ_{t=1..N} FCF_t / (1 + r)^t; TV = FCF_N × (1 + g_T) / (r − g_T); EV = PV + TV / (1 + r)^N; equity = EV − net_debt; per share = equity / shares_outstanding`

Two-stage discounted cash flow with end-of-year flows and a Gordon-growth perpetuity for the terminal value; the result is only as good as the growth, discount-rate and terminal assumptions. Informational mathematics only; not financial advice.

## Data Sources

- Wikipedia – Discounted cash flow — https://en.wikipedia.org/wiki/Discounted_cash_flow (reference, retrieved 2026-09-24)
- Wikipedia – Dividend discount model — https://en.wikipedia.org/wiki/Dividend_discount_model (reference, retrieved 2026-09-24)

Data freshness: `static`. Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output.

## API

- `GET https://tttkmbb.com/api/v1/calculate/dcf-valuation?current_free_cash_flow=…&growth_rate_percent=…&discount_rate_percent=…&terminal_growth_percent=…`
- `POST https://tttkmbb.com/api/v1/calculate/dcf-valuation` with JSON body `{"inputs": {…}}`
- Response: unified envelope (`success`, `request`, `result.values`, `result.units`, `sources`, `freshness`, `timestamp`, `next_actions`, `links`); see https://tttkmbb.com/docs/response-format.md
- Schema: https://tttkmbb.com/api/v1/calculators/dcf-valuation · OpenAPI operationId `calculate_dcf_valuation` in https://tttkmbb.com/openapi.json
- Authentication: none. Rate limit: fair use, see https://tttkmbb.com/docs/rate-limits.md.

## MCP

- Server: `https://tttkmbb.com/mcp` (Streamable HTTP, JSON-RPC 2.0, no auth)
- Tool:  `run_calculator` with `{"calculator_id": "dcf-valuation", "inputs": {…}}`

## Example

- FCF 100, 10 % growth, 5 years, 10 % discount, 2 % terminal: inputs `{"current_free_cash_flow":100,"growth_rate_percent":10,"projection_years":5,"discount_rate_percent":10,"terminal_growth_percent":2}` → `{"pv_of_cash_flows":500,"terminal_value":2053.4,"pv_of_terminal_value":1275,"enterprise_value":1775,"terminal_value_share_percent":71.83,"equity_value":1775}`
- FCF 5 M, 8 % growth, 10 years, 9 % discount, 2.5 % terminal, 2 M shares, net debt 10 M: inputs `{"current_free_cash_flow":5000000,"growth_rate_percent":8,"projection_years":10,"discount_rate_percent":9,"terminal_growth_percent":2.5,"shares_outstanding":2000000,"net_debt":10000000}` → `{"pv_of_cash_flows":47545244.93,"terminal_value":170222932.48,"pv_of_terminal_value":71904006.26,"enterprise_value":119449251.19,"equity_value":109449251.19,"value_per_share":54.72}`

```
GET https://tttkmbb.com/api/v1/calculate/dcf-valuation?current_free_cash_flow=100&growth_rate_percent=10&projection_years=5&discount_rate_percent=10&terminal_growth_percent=2
```

## Limitations

Cash flows are irregular or already listed year by year (use npv), the company has negative free cash flow, or you want the rate of return of known flows (use irr). Informational only; not financial advice. Two-stage discounted cash flow with end-of-year flows and a Gordon-growth perpetuity for the terminal value; the result is only as good as the growth, discount-rate and terminal assumptions. Informational mathematics only; not financial advice. All values are computed from the formula above; no measurement or live data is involved.

## FAQ

**Why must the terminal growth rate be below the discount rate?**

The Gordon formula TV = FCF × (1 + g)/(r − g) sums an infinite geometric series that only converges when g < r; a perpetual growth rate should also not exceed long-run economic growth.

**What is the difference between enterprise value and equity value?**

Enterprise value belongs to all capital providers; subtracting net debt (debt minus cash) leaves the value attributable to shareholders, which divided by the share count gives the per-share value.

## Related

- [NPV Calculator](https://tttkmbb.com/finance/npv.md) — Discount an explicit list of cash flows instead of a growth projection.
- [WACC Calculator](https://tttkmbb.com/investing/wacc.md) — Derive the discount rate from the capital structure.
- [Gordon Growth Model Calculator](https://tttkmbb.com/investing/gordon-growth.md) — The perpetuity formula used for the terminal value, applied to dividends.