Discounted cash flow

A two-stage DCF does not forecast forever by hand. It forecasts a stretch of explicit years, then assumes growth settles at a long-run rate and capitalises that remainder as a perpetuity. Enterprise value is the present value of both pieces. Most of the value usually sits in the terminal stage, which is why a small change in perpetual growth moves the answer more than a tweak to year one. The explicit years earn their keep by setting the level the perpetuity takes off from, not by being most of the value.

The standard form is $V = \sum_{t=1}^{n} \frac{F_t}{(1+r)^t} + \frac{F_n(1+g)}{(r-g)(1+r)^n}$, where $F_t$ is free cash flow in year $t$, $r$ the discount rate and $g$ perpetual growth after the explicit stage. Terminal growth has to stay below the discount rate: Gordon growth divides by $r - g$, so if $g$ meets or exceeds $r$ the perpetuity has no finite value. The DCF calculator is the two-stage identity with that bound enforced.

Enterprise value is the value of the operations, before subtracting net debt. Equity value is a further step. The discount rate is usually WACC, which is the job of the WACC calculator. Mixing a real WACC with nominal cash flows, or using the high explicit-stage growth rate as $g$ forever, is how a DCF explodes. For a finite series with no terminal value, net present value is the right tool.