Discounted Cash Flow (DCF)
A technique that adjusts future cash flows to their present value by applying a discount rate, reflecting the principle ...
Formula
Present Value = Future Cash Flow × Discount Factor
Real World
Tesla uses DCF when deciding whether to invest in a new Gigafactory, discounting projected revenues from cars sold in years 5–15 to compare fairly against the upfront construction cost today.
Exam Focus
Read discount factors directly from the table provided; show each year's calculation separately to earn method marks.
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