Discounted Cash Flow Calculator

Discount Cash Flows by Period

This discounted cash flow calculator converts annual forecast cash flows into a present value at your entered discount rate. Choose three, five or ten years. Enter cash received as positive amounts and cash paid as negative amounts.

Each present value equals cash flow divided by (1 + r) raised to t. The annual discount rate r is a decimal, so 10% becomes 0.1. Time t is measured in years from the valuation date.

End-year timing uses t = 1 for year one, then 2 for year two. Mid-year timing uses 0.5 and 1.5 respectively. The same timing applies to every forecast amount, including negative cash flows.

The fictional default forecast contains $84,500, $93,200, $108,600, $117,400 and $126,800 over five years. At 10% with end-year timing, the first year has a present value of $76,818. The whole forecast is worth $394,354 before any terminal value.

Use annual cash flows and an annual rate on the same basis. A company’s cash flows available to all capital providers need a different discount rate from cash flows available only to equity owners. Keep nominal cash flows with a nominal rate, and use a real rate for inflation-adjusted cash flows.

The calculator accepts discount rates from 0% to 100%. At 0%, it adds the signed cash flows without reducing them for time. Amounts can range from -$999,999,999 to $999,999,999. These are calculator limits, not suggested valuation assumptions.

Choose a Terminal-Value Method

Select None to value only the forecast years. Select Entered to add your own value at the final year-end. For Growth, the calculator estimates the value of cash flows continuing after the explicit forecast.

The perpetual-growth formula is final-year cash flow × (1 + g) ÷ (r - g). Both rates are decimals. The numerator is the following year’s cash flow. Growth must be below both the base and comparison discount rates.

NYU Stern’s terminal-value guidance explains the stable-growth approach and the need for sustainable assumptions. A final year containing an unusual receipt or payment can distort the continuing value.

For a fictional forecast ending with $100 in year three, a 10% discount rate and 2% growth give a terminal value of $1,275. Its present value at the valuation date is $958.

Every terminal value is discounted from the end of the final forecast year, including when forecast cash flows use mid-year timing. The Growth method treats subsequent cash flows as year-end amounts. The timing setting changes only the explicit forecast cash flows.

The Entered method keeps your terminal amount fixed when comparing rates. Growth recalculates the terminal amount at each rate. Include only cash flows beyond the explicit forecast in the terminal amount, so the final forecast year is counted once.

Compare the Valuation Assumptions

The headline adds the forecast present value and terminal present value. The schedule shows each year’s cash flow alongside its value at both rates. The comparison uses the same cash-flow schedule and timing.

For the default forecast, increasing the discount rate from 10% to 12% reduces the discounted value from $394,354 to $373,604. The comparison less base figure is -$20,751. Both examples exclude a terminal value.

A higher discount rate reduces the present value of a positive future receipt. It also reduces the size of a discounted future payment. Mixed positive and negative cash flows can therefore produce a different sensitivity from an all-positive forecast.

Discounted value measures the value today of future amounts. It does not show the bank balance available to pay a bill in a particular year. Use a cash budget with opening cash, receipts and payments to assess that balance.

ACCA’s company valuation factsheet discusses forecast cash flows and the choice of discount rates and terminal values. Enter the cash-flow basis you intend to value. The calculator does not automatically adjust for debt, surplus cash or ownership interests.

Displayed estimates round to whole dollars. Calculations keep full precision before display, so adding rounded schedule rows can differ slightly from the headline. Your entries stay on this page and are not sent or saved in browser storage.