Discounted cash flow

From Wacklepedia - The Free Encyclopedia

In the field of finance a discounted cash flow (DCF) is the product of:

• the anticipated nominal magnitude and sign of a cash flow, and
• the accumulated discount over the amount of the amount of time remaining until the anticipated time of the cash flow, at a rate of discount equivalent to the opportunity cost of capital.

Discounted cash flows are generally considered to be additive.

Future cash flows are discounted in order to express their present values, in order to properly determine the value of a company or project under consideration (see capital budgeting) as a whole.

DCF methods include:

• Weight adjusted cost of capital
• Adjusted present value
• Flow to equity
• Net present value

See also: Economic value added