Discounted cash flow

The discounted cash flow (DCF) analysis, in financial analysis, is a method used to value a security, project, company, or asset, that incorporates the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management, and patent valuation. Terminal value often represents a large share of total value and is highly sensitive to growth and discount rate assumptions. Enterprise DCF commonly uses free cash flow to the firm and a continuing value beyond the explicit forecast horizon.Used in industry as early as the 1800s, it was widely discussed in financial economics in the 1960s, and U.S. courts began employing the concept in the 1980s and 1990s.

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