Can you explain what discounted cash flow is?
Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows.
Why is it important in finance?
It's important because it helps investors determine the present value of an investment, allowing for better decision-making.
How do you calculate discounted cash flow?
You calculate DCF by estimating future cash flows and discounting them back to their present value using a discount rate.
What factors influence the discount rate?
Factors include the risk-free rate, the investment's risk premium, and the overall market conditions.
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