Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future. This applies to both financial investments for investors and for business owners looking to make changes to their businesses, such as purchasing new equipment. Discounted cash flow (DCF) helps determine the value of an investment based on its future cash flows. The present value of expected future cash flows is arrived at by using a discount rate to calculate the discounted cash flow (DCF).
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