Username: Fluffy Rating: Asked to: Dara Madee Date Created: 13 Apr 2018 |
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Category | 28 |
Tag | Financial |
Question | What is a 'Discounted Cash Flow (DCF)'? |
Hello Fluffy, Discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analyses use future free cash flow projections and discounts them, using a required annual rate, to arrive at present value estimates. A present value estimate is then used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one. |
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