Global Definitions Database

A valuation method used to estimate the feasibility and attractiveness of an investment opportunity; utilizes future free cash flow and discount rate estimates to determine a net present value (NPV) of the investment; if the present value of the cash flows is higher than the initial cost of the investment, the DCF analysis will show a favorable investment, or positive net present value (NPV); if the initial cost is higher, however, the NPV will be negative, showing an unfavorable investment.