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CashFlowDCF
Project future cash flows, discount them back to today, and add a terminal value to estimate intrinsic worth.
A dollar tomorrow is worth less than a dollar today. DCF discounts each projected future cash flow by (1 + r)^n, where r is the discount rate (usually WACC) and n is the year. Summing those present values gives you the intrinsic value of the cash flows over the projection period.
Because you can't project cash flows forever, a terminal value captures value beyond the forecast horizon. The Gordon Growth model assumes cash flows grow at a constant rate g forever: TV = CF_last × (1 + g) / (r − g). This terminal value is then discounted back to today. In most DCF models, terminal value accounts for 60–80% of total value.
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OpenTotal DCF value
$97,066
Positive intrinsic value
What you entered
PV of Year 1 cash flow
$5,000.00 ÷ (1 + 10%)^1= $4,545.45PV of Year 2 cash flow
$6,000.00 ÷ (1 + 10%)^2= $4,958.68PV of Year 3 cash flow
$7,000.00 ÷ (1 + 10%)^3= $5,259.20PV of Year 4 cash flow
$8,000.00 ÷ (1 + 10%)^4= $5,464.11PV of Year 5 cash flow
$9,000.00 ÷ (1 + 10%)^5= $5,588.29Sum of PV cash flows
Σ PV of CF₁ through CF5= $25,815.74Terminal value (Gordon Growth)
$9,000.00 × (1 + 2%) ÷ (10% − 2%)= $114,750.00PV of terminal value
$114,750.00 ÷ (1 + 10%)^5= $71,250.72Total DCF value
$25,815.74 + $71,250.72= $97,066.46Result
Total DCF value: $97,066
Discounting 5 years of projected cash flows at 10% and applying a 2% terminal growth rate gives an intrinsic value of $97,066.