Discounted cash flow: Difference between revisions

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* [[Present value]]
* [[Present value]]
* [[Time value of money]]
* [[Time value of money]]


==External links==
[http://www.treasurers.org/node/8445 Masterclass; Discounted cash flow]  The Treasurer magazine; www.treasurers.org

Revision as of 14:59, 25 July 2013

(DCF). A process of discounting cash flows that are expected in the future to make them comparable in value with cash flows received today.

This process is widely used in investment appraisal, where the rate used to discount with is a measure of the appropriately risk adjusted cost of capital.

Where the sum of discounted future positive cash flows (inflows) is calculated, this is often referred to as the total Present value of those cash flows.

Where the present value of future expected cash flows is netted against discounted investment outflows, this is referred to as the Net present value of the investment proposal.

Discounted cash flow techniques include Net Present Value (NPV) analysis and Internal Rate of Return (IRR) analysis.

See also


External links

Masterclass; Discounted cash flow The Treasurer magazine; www.treasurers.org