DCF (Discounted Cash Flow)

Definition

A valuation method that projects future cash flows and discounts them back to present value, or 'let's guess about the future and make it look scientific.'

Example Usage

The DCF model assumed 30% annual growth for 10 years, which is either brilliant or delusional.

Origin

Formalized in modern corporate finance in the 1960s-70s.

Fun Fact

A DCF's sensitivity analysis can show wildly different valuations based on small changes in assumptions; it's a confidence game.

Source: Corporate Finance Valuation

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