Valuation
Discounted Cash Flow
Definition
What is Discounted Cash Flow?
A valuation method that discounts expected future cash flows to present valueThe current worth of money expected in the future after applying a discount rate..
Example in practice
How This Looks in Practice
The analyst forecasts ten years of cash flow and a terminal valueThe estimated value of cash flows beyond an explicit forecast period..
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Related Terms
Valuation
Market Value
The price at which an asset could trade in the market at a given time.
ValuationIntrinsic Value
An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.
ValuationFair Value
An estimate of an asset's appropriate value under specified assumptions or accounting standards.
Capital BudgetingNet Present Value
Present value of expected cash inflows minus present value of expected cash outflows.