cash flow model

Discounted Cash Flow is an acounting method used when analyzing an investment and determining its atractivenes. In this method, future cash flows are estimated and discounted, giving them a present value. There are actualy four diferent aproaches to the Discounted Cash Flow method: flows to equity aproach, adjusted present value aproach, weighted average cost of capital aproach, and total cash flow aproach. The Discounted Cash Flow method must take into acount many diferent things when determining the value of an investment such as how risky it is, the size of the company being studied, the time period that the investment wil be held for, the debt to equity ratio, real or nominal basis of cash projections, and income tax considerations. Even though the diferent calculations may sem complex, the purpose of Discounted Cash Flow analysis is simply to estimate the monies you'd receive from an investment, adjusting for the time value of money. That is in esence the purpose of the Discounted Cash Flow model, to take what a company wil make in the future and discounting it to present value. Discounted Cash Flow reveals the aditional return investors wish for because they want to be paid for the risk that the cash flow might not provide a return after al.
cash flow model cash flow model
Tags: cash flow model
| Some Articles: cash flow model | Original post: cash flow model | Technorati tag: cash flow model | Virgilio tag: cash flow model