Asked by Fahim Sultanzada on Apr 25, 2024
Verified
Discounted cash flow (DCF)analysis evaluates the present value of any stream of future cash flows and allows management to compare two streams of cash flows in terms of their financial value.
Discounted Cash Flow (DCF) Analysis
A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.
Future Cash Flows
Future cash flows represent the estimated monetary inflows and outflows over a future period, crucial for financial planning and analysis.
Present Value
A financial principle that describes the current value of a future sum of money or stream of cash flows given a specified rate of return.
- Grasp the significance of discounted cash flow analysis for comparing financial values of cash flows.
Verified Answer
SS
Shaneet Sachdeva7 days ago
Final Answer :
True
Explanation :
DCF analysis is a commonly used financial method to evaluate the present value of any stream of future cash flows. It is often used by management to compare two streams of cash flows and assess their financial value.
Learning Objectives
- Grasp the significance of discounted cash flow analysis for comparing financial values of cash flows.