A method of assessing investments taking into account the expected accumulation of interest.
- A discounted cash flow calculation takes into account the value of earnings in future years.
- After all, goodwill is a noncash item, and most companies value assets based on discounted cash flow.
- The risk-free rate is also the basis for corporations and other investors evaluating projects or potential acquisition candidates using discounted cash flow analysis.
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Syllabification: dis·count·ed cash flow
Definition of discounted cash flow in:
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