Use variable names from the panel above (e.g. FV, r, n) โ or type numbers directly: 10000 / (1 + 0.08)^10
CF1
Free cash flow in Year 1
CF1 = 100
CF2
Free cash flow in Year 2
CF2 = 110
CF3
Free cash flow in Year 3
CF3 = 121
TV
Terminal value at end of Year 3 (use Gordon Growth)
TV = 1500
r% as decimal
Discount rate / WACC (decimal)
r = 0.10
๐ก You can also enter values directly in the formula: 10000 / (1 + 0.08)^10
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โฌ Export Calculation
Exports a plain .txt file with your expression, formula, all variable values, result, and educational notes โ ready to paste into any report, Word doc, Notion, or Google Docs.
The exported file includes the formula in standard mathematical notation โ you can paste it directly into Excel, Google Sheets, or back into FinanceSheep.
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Learn: The Building Block: How DCF Works
Approaches to Valuation ยท Educational Guide
The Core Idea
Imagine you own a food stall that earns $100 this year, $110 next year, and $121 the year after. What would you sell it for today? DCF tells you exactly that โ by converting every future dollar into today's dollars.
How It Works
DCF = Sum of all future cash flows, each divided by (1 + rate)^year. The "discount rate" is your required return โ the rate you need to earn to justify the risk. Higher risk โ higher rate โ lower value today.
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Real-World Example: CFs of $100, $110, $121 over 3 years plus a terminal value of $1,500 at r=10%: DCF = 100/1.1 + 110/1.21 + 121/1.331 + 1500/1.331 = $91 + $91 + $91 + $1,127 = $1,400.