Discounted cash flow
In the field of finance a discounted cash flow (DCF) is the product of:
- the anticipated nominal magnitude and sign of a cash flow, and
- the accumulated discount over the amount of the amount of time remaining until the anticipated time of the cash flow, at a rate of discount equivalent to the opportunity cost of capital.
Future cash flows are discounted in order to express their present values, in order to properly determine the value of a company or project under consideration (see capital budgeting) as a whole.
DCF methods include:
- Weight adjusted cost of capital
- Adjusted present value
- Flow to equity
