Discounted cash flow: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
m (Removed reference to month in other links)
imported>Doug Williamson
m (Reverted edits by Doug Williamson (talk) to last revision by Modonovan)
Line 1: Line 1:
(DCF).  
(DCF). A process of discounting cash flows that are expected in the future to make them comparable in value with cash flows received today.
 
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.
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.
Line 21: Line 19:




==Other links==
==External links==
[http://www.treasurers.org/node/8445 Masterclass: Discounted cash flow, The Treasurer 2012]
[http://www.treasurers.org/node/8445 Masterclass; Discounted cash flowThe Treasurer magazine; www.treasurers.org
 
[[Category:Business_Valuation]]
[[Category:Investment_Appraisal]]

Revision as of 13:17, 18 April 2014

(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