DEFINITION
Discounted Cash Flow

"Discounted cash flow": (DCF). A process of discounting cash flows that are expected in the future, making them smaller, 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 known 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 known 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.
Loading conversations.
Similar or Related Terms
Statistics
644
Characters
125
Words
50.36
Flesch Reading Ease
11.4
Flesch Kincaid Grade