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| (DCF).
| | A straight line relationship; the forecast or other dependent variable increases as the independent variable decreases. |
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| A process of discounting cash flows that are expected in the future to make them comparable in value with cash flows received today. | |
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| 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.
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| 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.
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| 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.
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| Discounted cash flow techniques include Net Present Value (NPV) analysis and Internal Rate of Return (IRR) analysis.
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| == See also == | | == See also == |
| * [[CertFMM]] | | * [[Positive linear relationship]] |
| * [[Discount rate]]
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| * [[Incremental cash flows]]
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| * [[Internal rate of return]]
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| * [[Investment appraisal]]
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| * [[Net present value]]
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| * [[Present value]]
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| * [[Time value of money]]
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| ===Other links===
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| [http://www.treasurers.org/node/8445 Masterclass; Discounted cash flow, The Treasurer, October 2012]
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| [[Category:Corporate_finance]]
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Revision as of 14:20, 23 October 2012
A straight line relationship; the forecast or other dependent variable increases as the independent variable decreases.
See also
