DCF (Discounted Cash Flow) Model

The Discounted Cash Flow (DCF) model is a financial method used to estimate the value of an investment based on its expected future cash flows. It calculates how much those future cash flows are worth today by applying a discount rate, which reflects the risk and time value of money. Essentially, it assesses whether an investment is worth more or less than its current price by considering how much money it is expected to generate in the future, adjusted for risks and inflation. This helps investors make informed decisions about buying or selling assets.