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| (DCF). A process of discounting cash flows that are expected in the future to make them comparable in value with cash flows received today.
| | ''Economics''. |
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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.
| | Where the real wage is above the equilibrium level and aggregate supply of labour exceeds aggregate demand for labour. |
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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 == |
| * [[Discount rate]] | | * [[Equilibrium unemployment]] |
| * [[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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| ==External links==
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| [http://www.treasurers.org/node/8445 Masterclass; Discounted cash flow, The Treasurer, October 2012]
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Revision as of 20:41, 11 August 2013
Economics.
Where the real wage is above the equilibrium level and aggregate supply of labour exceeds aggregate demand for labour.
See also
