Discounted Cash Flow (DCF)

A discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value estimate, which is used to evaluate the potential for investment.

Unlike the regular Cash Flow, which only accounts for flows during the first 12 months after asset acquisition, DCF will fluctuate as the holding period of the asset changes.

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