Discounted cash flow (DCF) valuation requires the analyst to estimate and isolate the expected free cash flows that a specific asset or investment will produce in the future. The analyst then must discount these cash flows back to the present.

a. Are the cash flows and discount rate before- or after-tax? Do both need to be the same or should one be before-tax and the other after-tax?

b. How is the discount rate for the investment derived? What assumptions are or should be made about the way the investment will actually be financed?

c. A very common criticism of DCF is that it "punishes future value and therefore is biased against long-term investments." Construct an argument refuting this statement.