Discounted Cash Flow (DCF).

Discounted cash flow (DCF) is a valuation method used in the finance industry, in which the future cash flows of an investment are discounted according to various methods in order to determine the value of that investment. When used to evaluate the feasibility of a new business venture, it typically discounts future cash flows according to the weighted average cost of capital to determine if the venture’s profits will outweigh its costs within a certain period of time. As with all forecasting methods, DCF is not perfect, especially if the input data is unreliable.