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**Table of Content**

Discounted Cash Flow Calculator calculates the discounted present value of future cash flow for a business, stock investment, house purchase, etc. It is more appropriate when future conditions are variable and there is slow terminal growth.

The discounted cash flow is used to analyze the desirability of an investment opportunity by considering projected future income. For evaluating the investment opportunities, range from **10% to 20%** reflecting the investorâ€™s expected rate of return.

The discounted cash flow formula equals the sum of all discounted cash flow from the power of different time periods.

\(DCF = \frac{CF_1}{(1+r)^1} + \frac{CF_2}{(1+r)^2} + \frac{CF_3}{(1+r)^3} + \ldots + \frac{CF_n}{(1+r)^n}\)

**Where:**

- \(CF_1, CF_2, CF_3, \ldots, CF_n\) = Expected cash flows at different time periods e.g: year 1, year 2, â€¦
- (r) = Discount rate represents the rate of return required by investors or the cost of capital.

To calculate the discounted cash flow estimate the future cash flow of investors and then discount them back to the present value using the discounted cash flow calculator.

Consider an investment opportunity in a manufacturing company that projects annual cash flows as follows:

- Year 1 = $100,000
- Year 2 = $120,000
- Year 3 = $150,000

**Formula:**

Given a discount rate of 15%, we’ll use the discounted cash flow formula:

\(DCF = \frac{CF_1}{(1+r)^1} + \frac{CF_2}{(1+r)^2} + \frac{CF_3}{(1+r)^3} + \ldots + \frac{CF_n}{(1+r)^n}\)

**Substituting the values:**

\(P V = \frac{$ 100,000}{(1+0.15)^{1}}+\frac{$ 120,000}{(1+0.15)^{2}}+\frac{$ 150,000}{(1+0.15)^{3}}\)

\(PV = \frac{$100,000}{1.15} + \frac{$120,000}{(1.15)^2} + \frac{$150,000}{(1.15)^3}\)

- Year 1 Cash Flow: $100,000 / (1 + 0.15)^1 = $86,956.52
- Year 2 Cash Flow: $120,000 / (1 + 0.15)^2 = $89,820.69
- Year 3 Cash Flow: $150,000 / (1 + 0.15)^3 = $98,267.72

\(P V \approx $ 86,956.52 + $ 89,820.69 + $ 98,267.72\)

\(P V \approx $ 275,045.93\)

The DCF calculator simplifies this process, providing valuable insights to aid in investment decision-making. The present value of the investment opportunity is approximately $275,045.93 indicating a discount rate of 15%.

- Select the DCF method
- Put the values accordingly
- Press on calculate

- Growth value
- Terminal value
- Total Intrinsic Value
- Value Of The Firm
- Value Of The Equity Equal
- Fair Value Per Share
- Percentage of overvalued company

No, yet these two concepts are closely related. DCf evaluates attractiveness based on future income and on the other side, NPV measures the difference between the present value of cash inflow and outflow.

The growth stage refers to the period during which a company experiences rapid expansion in profits, revenues, and market share by typically following the initial establishment phase.