discounted cash flow


discounted cash flow
A technique or process for valuing a financial instrument by applying a discount rate (or a series of discount rates) to calculate a present value of each future interest and principal cash flow expected from a financial instrument. The sum of the market values of the cash flows is considered to be the value of the instrument. For financial instruments with readily available, current trade prices, this value is called the fair value and is used in lieu of a trade- or transaction-based market value. American Banker Glossary
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( DCF)
Future cash flows multiplied by discount factors to obtain present values. Bloomberg Financial Dictionary
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Future cash flows multiplied by discount factors to obtain the present value. Exchange Handbook Glossary

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discounted cash flow ˌdiscounted ˈcash flow noun [countable usually singular] ACCOUNTING
a way of finding out if a planned investment will be profitable by using a particular interest rate to calculate the present value of future income from the investment over time. The interest rate used is the present market rate to which is added an extra amount for the risk involved. If, using this rate, the investment will bring in more money than its current cost, it is considered worth making

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   Establishes the relative worth of a future investment project by assessing the expected cash flows from the project against its net present value. Cash flows in the future are discounted, or are estimated as worth less than current cash flows, because their real value will be eroded by inflation. Commonly used in valuing companies and as a component of equity valuation.

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discounted cash flow UK US noun [U] (ABBREVIATION DCF) FINANCE, ACCOUNTING
the amount that an investment, company, project, etc. is worth now, based on calculating the amount you expect it will cost and earn in the future, then reducing this figure to represent its value now: »

One way of appraising projects is to use a method of discounting such as discounted cash flow (DCF) or net present value (NPV).

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discounted cash flow analysis/calculation/method

See also TIME VALUE OF MONEY(Cf. ↑time value of money)

Financial and business terms. 2012.

Look at other dictionaries:

  • Discounted Cash-Flow — (DCF) (dt. abgezinster Zahlungsstrom) beschreibt Verfahren zur Wertermittlung, insbesondere zur Unternehmensbewertung und zur Ermittlung des Verkehrswerts von Immobilien. Es baut dabei auf dem finanzmathematischen Konzept der Abzinsung (eng.:… …   Deutsch Wikipedia

  • discounted cash flow — (accounting) The present value of future estimated cash flows • • • Main Entry: ↑discount …   Useful english dictionary

  • Discounted cash flow — Excel spreadsheet uses Free cash flows to estimate stock s Fair Value and measure the sensibility of WACC and Perpetual growth In finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts… …   Wikipedia

  • Discounted Cash Flow — Die Artikel Kapitalwert und Discounted Cash Flow überschneiden sich thematisch. Hilf mit, die Artikel besser voneinander abzugrenzen oder zu vereinigen. Beteilige dich dazu an der Diskussion über diese Überschneidungen. Bitte entferne diesen… …   Deutsch Wikipedia

  • discounted cash flow — /ˌdɪskaυntɪd kæʃ fləυ/ noun the calculation of the forecast return on capital investment by discounting future cash flows from the investment, usually at a rate equivalent to the company’s minimum required rate of return. Abbreviation DCF COMMENT …   Dictionary of banking and finance

  • discounted cash flow — DCF A method used in capital budgeting, capital expenditure appraisal, and decision appraisal that predicts the stream of cash flows, both inflows and outflows, over time and discounts them, using a cost of capital or hurdle rate, to present… …   Accounting dictionary

  • discounted cash flow — DCF A method used in capital budgeting, capital expenditure appraisal, and decision appraisal that predicts the future stream of cash flows, both inflows and outflows, over time and discounts them, using a cost of capital rate or hurdle rate, to… …   Big dictionary of business and management

  • discounted cash flow — noun the current value of all the future cash to be generated by a development project …   Australian English dictionary

  • discounted cash flow — /ˌdɪskaυntɪd kæʃ fləυ/ noun the calculation of the forecast return on capital investment by discounting future cash flows from the investment, usually at a rate equivalent to the company’s minimum required rate of return. Abbr DCF …   Marketing dictionary in english

  • discounted cash flow — noun Finance a method of assessing investments that takes into account the expected accumulation of interest …   English new terms dictionary


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