Discounted Cash Flows


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Related to Discounted Cash Flows: Net present value, WACC

Discounted Cash Flows

Future, expected cash flows from a project or venture that have been adjusted to arrive at their present value. One uses the calculation of discounted cash flows to determine whether a particular investment is likely to be profitable.
References in periodicals archive ?
The Ministry bases its views about petroleum taxation and partial discounted cash flows on financial theory about value additivity.
Column 3 is the actual cash flows, Column 4 is cash flows discounted by the dollar-weighted return, Column 5 is absolute value of discounted cash flows and Column 6 is percentage difference from starting portfolio value using Column 3.
When applying the method of discounted cash flows to high-tech companies, it is sometimes difficult to produce an assessment because of recurring losses early in the cycle and the definition of the terminal value.
Analyze the firm's projected discounted cash flows as a valuation methodology and determinant of the firm's current market value and an appropriate market clearing price for its shares or ADRS.
For example, you can estimate the increase in revenue because of the "new competitive technology." The justification will be most likely in the form of a five-year spreadsheet showing discounted cash flows for each of the five years (see Fig.
This example demonstrates the differences between undiscounted cash flows, discounted cash flows using the traditional approach and discounted expected cash flows according to the concepts statement.
They also try to help managers measure the value created by knowledge management tactics; link knowledge management efforts to the economics of a business; predict whether a particular strategy will increase or decrease value for shareholders; calculate discounted cash flows and real option value; create proposals for investment in knowledge assets; and recognize emerging and future trends in knowledge management.
Traditionally, all three income approaches (discounted cash flows, definitional, and empirical) use single-point estimates in the computations and do not explicitly take into account the inherent uncertainty in those numbers.
However, others measure loan impairment based on discounted cash flows. In response to the inconsistency, the Financial Accounting Standards Board (FASB) issued Statement No.
In that case, each year must be discounted individually to arrive at the total discounted cash flows.
Like NPV, the internal rate of return (IRR) method is based on discounted cash flows. The IRR is the rate of return that a project is expected to yield over its lifetime.
Step 2: The transfer of data from the DATA INPUTS section of the template to the PRESENT VALUE CALCULATIONS section, not shown, where the Discounted Cash Flows are computed.