Definition
Discounted Cash Flow – A valuation method that projects a company's future free cash flows over several years, then discounts them back to today's dollars using a discount rate (see WACC) to reflect the time value of money and risk. A terminal value, representing all cash flows beyond the projection window, is typically added using a perpetuity-growth or exit-multiple assumption. The result is an estimate of what the business is worth today based purely on the cash it's expected to generate, independent of what the market currently prices it at. Found In: Valuation/analyst models, not a line item in any filing