Discounted Cash Flow (DCF)

Discounted Cash Flow (DCF) is a financial method used to estimate the value of an investment or business based on its expected future cash flows. It involves projecting future money the investment will generate and then adjusting those amounts to their current value using a discount rate, which accounts for risk and the time value of money. Essentially, DCF helps determine how much a stream of future earnings is worth today, aiding investors and company owners in making informed decisions about buying, selling, or investing in assets.