Series 79: Discounted Cash Flow (DCF) Analysis

Taken from our FINRA Investment Banking Exam

Definition of the term Discounted Cash Flow (DCF) Analysis...

a valuation method based on the notion that the value of a company can be calculated from its projected free cash flow. In a DCF, future cash flows are estimated and discounted to their respective present values. They are then added to the discounted terminal value to reach an estimated company value.

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