### Formula

DPV

discounted present value of the future cash flow (FV)

FV

nominal value of a cash flow amount in a future period

i

interest rate

n

time in years before the future cash flow occurs

DPV

discounted present value of the future cash flow (FV)

FV

nominal value of a cash flow amount in a future period

i

interest rate

n

time in years before the future cash flow occurs

In finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money. All future cash flows are estimated and discounted to give their present values (PVs) â€” the sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value or price of the cash flows in question.rnUsing DCF analysis to compute the NPV takes as input cash flows and a discount rate and gives as output a price; the opposite process â€” taking cash flows and a price and inferring a discount rate, is called the yield.

FV

i

n

DPV

Precision

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