A method of evaluating an investment by estimating future cash flows and taking into consideration the time value of money. also called capitalization of income. see also present value, hurdle rate.

A yield capitalization method used to calculate the present value of anticipated future cash flows.

The process of converting or discounting future cash flows to present value by way of a compounded annual rate of return (interest rate) that represents the competitive value of investments.

An economic-based valuation methodology in which the sum of the present value of a company's future free cash flows is equal to the fair market value of a business. This method takes into account the risk factors associated with achieving the future cash flows when calculating present value. DCF analysis is one of the most commonly accepted valuation methodologies.

An income-property appraisal technique that estimates value by discounting all expected future cash flows to the present and summing the discounted amounts.

The procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analyst specifies the quantity, variability, timing and duration of the income streams as well as the quantity and timing of the reversion and discounts each to its present value at a specified yield rate.

The present value of any individual asset or portfolio of assets equals the discounted value of expected net future cash flows. The discount factor should reflect the cost of waiting (i.e. the pure time value of money), the risk of the asset and expected future inflation. DCF analysis is applied to investment project appraisal and corporate valuation.

A comparison of the cash flows of two potential investment alternatives, accomplished essentially by calculating the " present value" of each alternative using the same discount rate.

Techniques used in investment and development appraisal whereby future inflows and outflows of cash associated with a particular project are expressed in present-day terms by discounting. The most widely used forms of DCF are the internal rates of return (IRR) and net present value (NPV). The techniques may be used for such purposes as the valuation of land and investment, the ranking of projects or their components.

Comparison of cash flows resulting form two or more investment or payment obligation alternatives by calculating the "Present Value" of each, using the same discount rate.

One method for providing an estimate of the current value of future incomes and expenses projected for a project.