What is Discounted Cash Flow Model and How is it Important?

The concept of the time value of money is extremely important in financial analysis as time plays an important role in the valuation of projects and assets in a business. Discounted cash flow model (DCF) is a valuation method used to assess the value of an investment dependent on its future cash flows. These cash flow models help investors who want to know the return on investment, for their investments in the future. This means that it showcases the risk compensation in business for investors to invest capital in the business after waiting for some time for getting returns on their investment.

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