A method of project evaluation, based on discounting future cash flows at a specific interest rate in order to arrive at their present value as at the calculation date.
The valuation of future cash flows in present value terms.
Used in measuring the return from a real estate investment, the present value of a future income stream as determined by a given discount rate.
An investment appraisal technique which takes into account both the time value of money and also the total profitability of a project over a project's life.
The Cash Flow forecasts, discounted back to today's dollars using a discount rate. The discount rate is generally the WACC.
The present value of future Cash flows, taking into account the timing of the future stream of payments. Take an example of an anticipated cash flow of £100. Its present value is lower, as it could be invested and earn interest. If a current investment of £92 is worth £100 by the end of the year, the discounted cash flow value of the anticipated £100 would be £92. Discounted cash flows are used when comparing alternative investment options, entailing different payment and revenue time structures. See also Capitalized value. Français: Flux de trésorerie escomptés Español: Flujo de efectivo actualizado
A method to determine the cost of common equity component of return using a discounted stream of future cash dividends.
A method of assessing the value of an investment based on predicted cash flows 'discounted' to take account of the value of money over time.
A method to estimate the value of a real estate investment, which emphasizes after-tax cash flows and the return on the invested dollars discounted over time to reflect a discounted yield. The value of the real estate investment is the present worth of the future after-tax cash flows from the investment, discounted at the investor's desired rate of return.
The discounting of the projected net cash flows of a capital project to ascertain its present value, using a yield or internal rate of return (IRR), net present value (NPV) or discounted payback.
a valuation methodology whereby the present value of all future cash flows expected from a company is calculated.
The estimated present value of future cash flow, determined by a given discount rate.
a method of calculating how profitable an investment will be, by looking at the amount paid, the interest earned, and the degree of risk taken.
Concept of relating future cash inflows and outflows over the life of a project or operation to a common base value thereby allowing more validity to comparison of projects with different durations and rates of cash flow.
A method of assessing the value of an investment based on predicted cash flows discounted to take account of the fact that a euro tomorrow is worth less than a euro today.
a mathematical excercise that discounts the potential profitability of the business based on the risks and time associated with expected cash flows
Estimated cash flow that factors in future revenues and expenditures to determine the intrinsic value of a business.
Discounted cash flow is a sophisticated technique used by financial analysts. Despite its complexity, discounted cash flow analysis is based on a simple idea - that cash today is worth more than cash promised in the future.
An evaluation of the future net cash flows generated by a capital project by discounting them to their present-day value. The two methods most commonly used are
Present value of future income stream arrived at after applying the discount (interest) rate.
A method of investment appraisal which calculates future cash inflows and outflows in present day values by discounting at an appropriate rate of interest. The most commonly used variants on this method are the Internal Rate of Return (IRR) and Net Present Value (NPV)
The application of a factor, based on the cost of the firm's capital or prevailing interest rates (with a possible adjustment for risk), to the cash inflows and outflows from a project or investment. Also called net present value analysis.
The effect of a projects influence on the company's cash flow is estimated for each year of its life. To compensate for money received in the future being worth less than money earned today the future incomes are discounted to their present day value.
A method of determining the present value of an investment or a business, by discounting the value of future monies to be received by a suitable interest rate.
a system for evaluating investment opportunities that discounts or reduces the value of future cash flow. (See present value.)
A method of evaluating long-term projects that explicitly takes into account the time value of money.
This is a serious boffin's approach to valuing companies supposedly used by Warren Buffet. Analysis is used to determine the likely stream of free cash flow a company should generate over the foreseeable future. This sum is discounted back to its value today using an appropriate figure for the long-term rate of interest. The resulting figure is then compared with the valuation put on the business by the stock market to see whether the shares are cheap or dear.
A technique for assessing the present value (i.e. the value today) of future income and payments which takes account of the value of money over time.
An investment appraisal technique which takes account of the time value of money by assessing the present value of future income and expenditure. It is often used in valuing an investment or to show the viability of a project.
the return desired at some time in the future for a payment made now.
calculation used to determine the future value of a cash stream received over time, or the present value of a cash stream received over time.
A method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.
An analysis in which future cash flows are converted, or discounted, to their value at the present time. The rate of return for an investment is that interest rate at which the present value of all related cash flow equals zero.
The net present value of a stream of future cash flows (see discount rate).
A technique that gives the present value of an investment, and is used for calculating comparable evaluators for investments with future cash flows.
Discounted cash flow is a method of investment appraisal. It involves the discounting of the projected net cash flows of a project to ascertain its present value.
The calculation of the present value of a stream of future cash flows, taking into account both risk and the time expected to elapse before the cash is received.... more on Discounted cash flow
A method that provides for both the time value of money and the degree of risk associated with the realization of the benefits of a future cash stream. 1) The method of evaluating a long-term project by explicitly considering the time value of money. 2) The present value of a project, discounted by an appropriate discount rate.
Money has a cost or value just like other assets. The sooner money is received the better since it can be invested or put to productive use and earn more money. Bring back dollars earned at different points in time to the present is called discounted cash flow. The cash flow is discounted at some rate back to its present value so that all dollars regardless of when collected can be compared. The rate used in discounting the cash flow is generally the rate people think or want to earn on investments.
Present value of future cash estimated to be generated.
Future cash flows multiplied by discount factors to obtain present value.
Technique for calculating the present value of future income and payments, taking account of the time value of money.
A valuation methodology that discounts expected future cash flows at a discount rate appropriate for the risk, currency, and maturity of the cash flows.
Future value of anticipated cash receipts and expenditures on a specified date. It is computed using net present value (NPV) or internal rate of return (IRR) and is a consideration in analyses of capital and securities investments. The NPV method uses a discounted rate of interest based on the marginal cost of capital to future cash flows to bring them into to the present. The IRR formula finds an investment's average return for the life of the investment. It identifies the discount rate that matches the present value of future cash flows to the investment's cost.
When future cash flows are multiplied by a series of discount factors to arrive at a fair value to pay for a company's share, the process is called discounted cash flow method.
In finance, the discounted cash flow (or DCF) approach describes a method to value a project or an entire company using the concepts of the time value of money. The DCF methods determine the present value of future cash flows by discounting them using the appropriate cost of capital. This is necessary because cash flows in different time periods cannot be directly compared since most people prefer money sooner rather than later (put simply: a dollar in your hand today is worth more than a dollar you may receive at some point in the future).