What Is Discounted Cash Flow (DCF) Analysis?
Discounted Cash Flow (DCF) analysis is a method used to estimate the value of an investment based on its future cash flows. It involves projecting the future cash flows and then discounting them back to present value using a discount rate to account for the time value of money. The resulting present value is then compared to the initial investment cost to determine if the investment is expected to generate positive returns. DCF is widely used in finance and real estate for valuation purposes.
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