Valuation

Discounted Cash Flow

Definition

What is Discounted Cash Flow?

A valuation method that discounts expected future cash flows to present value.

Example in practice

The analyst forecasts ten years of cash flow and a terminal value.

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The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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