A discounted cash flow estimate is only as useful as the cash flows and risks behind it. Use the StockMags DCF calculator to make those assumptions visible, including how much of your estimate depends on cash flows beyond year ten.
Start with the right cash flow
This calculator values equity directly using free cash flow to equity per diluted share and a cost of equity. It is not an enterprise-value model. Do not enter unlevered firm cash flow or a weighted average cost of capital, and do not subtract debt from the result again.
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How the 10-year model works
Years one through five use the first growth rate. Years six through ten use the second. The terminal value assumes continuing growth after year ten; the cost of equity must exceed that terminal rate. Each projected cash flow and the terminal value are discounted to today.
Why the terminal share matters
When most of an estimate comes from the terminal value, a small change in long-run growth or the discount rate can move the result substantially. The calculator displays that share and a sensitivity table so you can see the dependence before treating one number as precise.
When should I use a different model?
Negative starting cash flow, unstable borrowing, financial institutions and major restructurings can require a more specialized model. This tool does not automatically reconcile filings, dilution or debt policy. Review the CFA Institute explanation of equity and firm cash flows, then preserve your input sources and assumptions. Compare the result with the EPS-based valuation.
Use these tools for education and research organization. Figures and assumptions are not independently verified. Model outputs do not predict returns or recommend a transaction. Investing involves risk, including loss of principal.
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