{"id":46435,"date":"2025-02-17T15:30:28","date_gmt":"2025-02-17T08:30:28","guid":{"rendered":"https:\/\/bestarion.com\/us\/?p=46435"},"modified":"2025-02-17T15:36:11","modified_gmt":"2025-02-17T08:36:11","slug":"discounted-cash-flow-dcf","status":"publish","type":"post","link":"https:\/\/bestarion.com\/us\/discounted-cash-flow-dcf\/","title":{"rendered":"Discounted Cash Flow (DCF) Explained: Formula, Examples &#038; How It Works"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"46435\" class=\"elementor elementor-46435\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-533d95d7 e-flex e-con-boxed e-con e-parent\" data-id=\"533d95d7\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-6006c7dd elementor-widget elementor-widget-text-editor\" data-id=\"6006c7dd\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"text-align: justify;\" data-pm-slice=\"1 1 []\"><strong>Discounted Cash Flow (DCF)<\/strong> analysis is a powerful valuation method used to estimate the value of an investment based on its expected future cash flows. It is widely used in finance for business valuation, investment decisions, and capital budgeting. This guide provides an in-depth explanation of the DCF method, its formula, and practical examples.<\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"What_is_Discounted_Cash_Flow_DCF\"><\/span>What is Discounted Cash Flow (DCF)?<span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\">DCF is a financial valuation method that determines the present value of an investment based on its projected future cash flows, discounted back to the present using an appropriate discount rate. The fundamental principle of DCF is that money received today is worth more than the same amount received in the future due to the time value of money (TVM).<\/p><p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-46442\" src=\"https:\/\/bestarion.com\/us\/wp-content\/uploads\/2025\/02\/discounted-cash-flow-dcf.png\" alt=\"Discounted Cash Flow (DCF) definition and formula\" width=\"850\" height=\"400\" title=\"\" srcset=\"https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/02\/discounted-cash-flow-dcf.png 850w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/02\/discounted-cash-flow-dcf-300x141.png 300w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/02\/discounted-cash-flow-dcf-768x361.png 768w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/02\/discounted-cash-flow-dcf-710x334.png 710w\" sizes=\"(max-width: 850px) 100vw, 850px\" \/><\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"The_DCF_Formula\"><\/span>The DCF Formula<span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\">The basic formula for DCF is:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84f727a elementor-widget elementor-widget-html\" data-id=\"84f727a\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<script type=\"text\/javascript\" async\r\n  src=\"https:\/\/cdnjs.cloudflare.com\/ajax\/libs\/mathjax\/2.7.7\/MathJax.js?config=TeX-MML-AM_CHTML\">\r\n<\/script>\r\n\r\n$$\r\nDCF = \\sum \\frac{CF_t}{(1 + r)^t}\r\n$$\r\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-bf56b24 elementor-widget elementor-widget-html\" data-id=\"bf56b24\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<style>\r\n    .latex-formula {\r\n        font-family: Arial, sans-serif;\r\n        color: black;\r\n        font-size: 16px;\r\n        line-height: 1.8;\r\n    }\r\n    .latex-formula ul {\r\n        padding-left: 20px;\r\n    }\r\n    .latex-formula li {\r\n        margin-bottom: 10px;\r\n    }\r\n<\/style>\r\n\r\n\r\n<div class=\"latex-formula\">\r\n    <p>Where:<\/p>\r\n    <ul>\r\n        <li>\\( \\text{DCF} \\) = Discounted Cash Flow<\/li>\r\n        <li>\\( \\text{CF}_t \\) = Cash flow in period \\( t \\)<\/li>\r\n        <li>\\( r \\) = Discount rate (cost of capital or required rate of return)<\/li>\r\n        <li>\\( t \\) = Time period (years, quarters, etc.)<\/li>\r\n        <li>\\( n \\) = Total number of periods (years)<\/li>\r\n    <\/ul>\r\n<\/div>\r\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f4192ad elementor-widget elementor-widget-text-editor\" data-id=\"f4192ad\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"text-align: justify;\">For a continuous stream of cash flows, the formula extends into an integral representation.<\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Steps_to_Perform_a_DCF_Analysis\"><\/span>Steps to Perform a DCF Analysis<span class=\"ez-toc-section-end\"><\/span><\/h2><ol style=\"text-align: justify;\" start=\"1\" data-spread=\"false\"><li><strong>Estimate Future Cash Flows<\/strong>: Identify and project the expected cash flows over the investment period.<\/li><li><strong>Choose a Discount Rate<\/strong>: Determine the discount rate, typically based on the Weighted Average Cost of Capital (WACC) or required rate of return.<\/li><li><strong>Discount the Future Cash Flows<\/strong>: Use the DCF formula to calculate the present value of each projected cash flow.<\/li><li><strong>Sum the Discounted Cash Flows<\/strong>: Add up all the discounted cash flows to arrive at the Net Present Value (NPV).<\/li><li><strong>Interpret the Result<\/strong>:<br \/><ul data-spread=\"false\"><li>If NPV &gt; 0, the investment is considered profitable.<\/li><li>If NPV &lt; 0, the investment may not be worthwhile.<\/li><li>If NPV = 0, the investment breaks even.<\/li><\/ul><\/li><\/ol><h2 id=\"mntl-sc-block_9-0\" class=\"comp mntl-sc-block finance-sc-block-heading mntl-sc-block-heading\" style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"How_Does_Discounted_Cash_Flow_DCF_Work\"><\/span><span class=\"mntl-sc-block-heading__text\">How Does Discounted Cash Flow (DCF) Work?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\" data-start=\"48\" data-end=\"468\">Discounted cash flow (DCF) analysis calculates<a href=\"https:\/\/www.investopedia.com\/terms\/p\/presentvalue.asp\" rel=\"nofollow noopener\" target=\"_blank\"> the present value<\/a> of expected future cash flows using a discount rate. This approach helps investors determine whether the future cash flows generated by an investment or project will exceed the initial investment cost. In simple terms, it assesses whether the money an investment is projected to generate in the future is worth more than the amount being invested today.<\/p><p style=\"text-align: justify;\" data-start=\"470\" data-end=\"627\">If the calculated value is higher than the initial investment, the project is considered financially viable. If not, it may not be a worthwhile investment.<\/p><p style=\"text-align: justify;\" data-start=\"629\" data-end=\"978\">DCF analysis is useful for estimating potential returns while accounting for the time value of money\u2014the concept that a dollar today is worth more than a dollar received in the future because it can be invested to generate returns. This method applies to any situation where money is spent today with the expectation of earning more in the future.<\/p><p style=\"text-align: justify;\" data-start=\"980\" data-end=\"1247\">For example, assuming a 6% annual interest rate, $100 in a fixed deposit account will grow to $106 in a year. Likewise, if a payment of $100 is delayed for a year, its present value is approximately $94.34 because it cannot be invested immediately to earn interest.<\/p><p style=\"text-align: justify;\" data-start=\"1249\" data-end=\"1578\">To perform a DCF analysis, an investor needs to estimate future cash flows and the potential final value of an asset, business, or investment. Additionally, selecting an appropriate discount rate is crucial, as it varies depending on factors like the investor&#8217;s risk tolerance, market conditions, and the nature of the project.<\/p><p style=\"text-align: justify;\" data-start=\"1580\" data-end=\"1733\" data-is-last-node=\"\">However, if future cash flows are difficult to predict or the project involves significant uncertainties, DCF analysis may not provide reliable insights.<\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Example_of_DCF_Calculation\"><\/span>Example of DCF Calculation<span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\" data-start=\"22\" data-end=\"322\">When a company considers investing in a new project or purchasing equipment, it typically uses its weighted average cost of capital (WACC) as the discount rate to perform a discounted cash flow (DCF) analysis. The WACC represents the expected rate of return that investors anticipate for that year.<\/p><p style=\"text-align: justify;\" data-start=\"324\" data-end=\"490\">For example, suppose a company plans to launch a new production line. The company&#8217;s WACC is 6%, meaning that a 6% discount rate will be used in the DCF calculation.<\/p><p style=\"text-align: justify;\" data-start=\"492\" data-end=\"620\">The initial investment required is $12 million, and the project is expected to generate cash flows over five years as follows:<\/p><p style=\"text-align: justify;\" data-start=\"622\" data-end=\"647\"><strong data-start=\"622\" data-end=\"645\">Projected Cash Flow<\/strong><\/p><table data-start=\"649\" data-end=\"825\"><thead data-start=\"649\" data-end=\"672\"><tr data-start=\"649\" data-end=\"672\"><th data-start=\"649\" data-end=\"656\">Year<\/th><th data-start=\"656\" data-end=\"672\">Cash Flow<\/th><\/tr><\/thead><tbody data-start=\"696\" data-end=\"825\"><tr data-start=\"696\" data-end=\"721\"><td>1<\/td><td>$1.5 million<\/td><\/tr><tr data-start=\"722\" data-end=\"746\"><td>2<\/td><td>$2 million<\/td><\/tr><tr data-start=\"747\" data-end=\"773\"><td>3<\/td><td>$3.5 million<\/td><\/tr><tr data-start=\"774\" data-end=\"798\"><td>4<\/td><td>$4 million<\/td><\/tr><tr data-start=\"799\" data-end=\"825\"><td>5<\/td><td>$5.5 million<\/td><\/tr><\/tbody><\/table><p style=\"text-align: justify;\" data-start=\"827\" data-end=\"921\">Applying the DCF formula, the discounted cash flows for each year are calculated as follows:<\/p><p style=\"text-align: justify;\" data-start=\"923\" data-end=\"961\"><strong data-start=\"923\" data-end=\"959\">Discounted Cash Flow Calculation<\/strong><\/p><table data-start=\"963\" data-end=\"1279\"><thead data-start=\"963\" data-end=\"1021\"><tr data-start=\"963\" data-end=\"1021\"><th data-start=\"963\" data-end=\"970\">Year<\/th><th data-start=\"970\" data-end=\"983\">Cash Flow<\/th><th data-start=\"983\" data-end=\"1021\">Discounted Cash Flow (nearest $)<\/th><\/tr><\/thead><tbody data-start=\"1080\" data-end=\"1279\"><tr data-start=\"1080\" data-end=\"1119\"><td>1<\/td><td>$1.5 million<\/td><td>$1,415,094<\/td><\/tr><tr data-start=\"1120\" data-end=\"1158\"><td>2<\/td><td>$2 million<\/td><td>$1,780,336<\/td><\/tr><tr data-start=\"1159\" data-end=\"1199\"><td>3<\/td><td>$3.5 million<\/td><td>$2,941,791<\/td><\/tr><tr data-start=\"1200\" data-end=\"1238\"><td>4<\/td><td>$4 million<\/td><td>$3,168,807<\/td><\/tr><tr data-start=\"1239\" data-end=\"1279\"><td>5<\/td><td>$5.5 million<\/td><td>$4,125,452<\/td><\/tr><\/tbody><\/table><p style=\"text-align: justify;\" data-start=\"1281\" data-end=\"1486\">Summing up all the discounted cash flows results in a total present value of <strong data-start=\"1358\" data-end=\"1373\">$13,431,480<\/strong>. Subtracting the initial investment of <strong data-start=\"1413\" data-end=\"1428\">$12 million<\/strong>, we obtain a net present value (NPV) of <strong data-start=\"1469\" data-end=\"1483\">$1,431,480<\/strong>.<\/p><p style=\"text-align: justify;\" data-start=\"1488\" data-end=\"1646\">Since the NPV is positive, this suggests that the project could yield a return greater than the initial cost, making it a potentially profitable investment.<\/p><p style=\"text-align: justify;\" data-start=\"1648\" data-end=\"1843\" data-is-last-node=\"\">However, if the project had an initial cost of <strong data-start=\"1695\" data-end=\"1710\">$14 million<\/strong>, the NPV would be <strong data-start=\"1729\" data-end=\"1743\">&#8211; $568,520<\/strong>, indicating that the investment cost exceeds the projected returns, making it a less viable option.<\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Advantages_of_DCF_Analysis\"><\/span>Advantages of DCF Analysis<span class=\"ez-toc-section-end\"><\/span><\/h2><ul style=\"text-align: justify;\" data-spread=\"false\"><li data-start=\"101\" data-end=\"259\">DCF analysis helps investors and businesses determine whether an investment is financially viable by projecting future cash flows and their present value.<\/li><li data-start=\"260\" data-end=\"393\">It can be applied to various types of investments and capital projects, as long as future cash flows can be reasonably estimated.<\/li><li data-start=\"394\" data-end=\"549\">The model allows for adjustments to test different &#8220;what-if&#8221; scenarios, helping users evaluate multiple potential outcomes and make informed decisions.<\/li><\/ul><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Limitations_of_DCF_Analysis\"><\/span>Limitations of DCF Analysis<span class=\"ez-toc-section-end\"><\/span><\/h2><ul style=\"text-align: justify;\" data-spread=\"false\"><li data-start=\"576\" data-end=\"804\">A key drawback of DCF analysis is its reliance on estimates rather than actual figures. Since future cash flows and discount rates must be predicted, the accuracy of the results depends on the precision of these assumptions.<\/li><li data-start=\"805\" data-end=\"1042\">Forecasting future cash flows involves uncertainty, as they are influenced by market demand, economic conditions, technological advancements, competition, and unforeseen risks or opportunities\u2014many of which are difficult to quantify.<\/li><li data-start=\"1043\" data-end=\"1293\" data-is-last-node=\"\">While DCF is a valuable tool, it should not be used in isolation. Investors and companies should also consider alternative valuation methods, such as comparable company analysis and precedent transactions, to make well-rounded investment decisions.<\/li><\/ul><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Applications_of_DCF_Analysis\"><\/span>Applications of DCF Analysis<span class=\"ez-toc-section-end\"><\/span><\/h2><ul style=\"text-align: justify;\" data-spread=\"false\"><li><strong>Business Valuation<\/strong>: Used by investors and analysts to determine the fair value of a company.<\/li><li><strong>Investment Decisions<\/strong>: Helps assess the profitability of projects or acquisitions.<\/li><li><strong>Capital Budgeting<\/strong>: Used by corporations to evaluate long-term investment opportunities.<\/li><li><strong>Real Estate Valuation<\/strong>: Applied in property investment to determine future value based on rental income.<\/li><\/ul><h2 style=\"text-align: justify;\" data-start=\"0\" data-end=\"76\"><span class=\"ez-toc-section\" id=\"Is_Discounted_Cash_Flow_DCF_the_Same_as_Net_Present_Value_NPV\"><\/span><sup><strong data-start=\"4\" data-end=\"74\">Is Discounted Cash Flow (DCF) the Same as Net Present Value (NPV)?<\/strong><\/sup><span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\" data-start=\"78\" data-end=\"210\">Although DCF and NPV are closely related, they are not identical. NPV expands on the DCF calculation by adding an additional step.<\/p><p style=\"text-align: justify;\" data-start=\"212\" data-end=\"255\">The DCF process involves four main steps:<\/p><ol style=\"text-align: justify;\" data-start=\"256\" data-end=\"408\"><li data-start=\"256\" data-end=\"289\">Estimating future cash flows<\/li><li data-start=\"290\" data-end=\"332\">Choosing an appropriate discount rate<\/li><li data-start=\"333\" data-end=\"373\">Discounting the expected cash flows<\/li><li data-start=\"374\" data-end=\"408\">Summing the discounted values<\/li><\/ol><p style=\"text-align: justify;\" data-start=\"410\" data-end=\"522\">NPV takes this a step further by subtracting the initial investment cost from the total discounted cash flows.<\/p><p style=\"text-align: justify;\" data-start=\"524\" data-end=\"669\">For example, if the total discounted cash flows from an investment amount to $248.68 and the initial investment cost is $200, the NPV would be:<\/p><p style=\"text-align: justify;\" data-start=\"671\" data-end=\"706\"><strong data-start=\"671\" data-end=\"704\">NPV = $248.68 &#8211; $200 = $48.68<\/strong><\/p><p style=\"text-align: justify;\" data-start=\"708\" data-end=\"850\" data-is-last-node=\"\">A positive NPV indicates that the investment is expected to generate more value than its cost, making it a potentially profitable opportunity.<\/p><h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2><p style=\"text-align: justify;\">DCF analysis is a fundamental tool for valuing investments based on projected future cash flows. While it has certain limitations, when used correctly, it provides valuable insights into the true worth of an investment. By carefully selecting the discount rate and making realistic cash flow projections, investors and businesses can make well-informed financial decisions.<\/p><p style=\"text-align: justify;\">By mastering DCF, you gain a deeper understanding of financial valuation, allowing you to assess investment opportunities with greater confidence.<\/p><p style=\"text-align: justify;\">Read more:<\/p><ul><li><a href=\"https:\/\/bestarion.com\/us\/accounting-information-system-ais\/\">Accounting Information System (AIS): Definition, Benefits and Components<\/a><\/li><li class=\"post-title\"><a title=\"Balance Sheet: Explanation, Components, and Examples\" href=\"https:\/\/bestarion.com\/us\/what-is-balance-sheet\/\">Balance Sheet: Explanation, Components, and Examples<\/a><\/li><li class=\"post-title\"><a title=\"Outsourcing Finance and Accounting Services: The Complete Guide\" href=\"https:\/\/bestarion.com\/us\/outsourcing-finance-and-accounting-services\/\">Outsourcing Finance and Accounting Services: The Complete Guide<\/a><\/li><\/ul><p>\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-369f0246 e-flex e-con-boxed e-con e-child\" data-id=\"369f0246\" data-element_type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-682c171b e-flex e-con-boxed e-con e-child\" data-id=\"682c171b\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-30da9b8 e-con-full e-flex e-con e-child\" data-id=\"30da9b8\" data-element_type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4ae64a7b elementor-widget elementor-widget-heading\" data-id=\"4ae64a7b\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\"><span class=\"ez-toc-section\" id=\"Need_Outsourced_Accounting_Services\"><\/span>Need Outsourced Accounting Services<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6ad13bff elementor-widget elementor-widget-heading\" data-id=\"6ad13bff\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h6 class=\"elementor-heading-title elementor-size-default\">For Your CPA Firm<\/h6>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6d0167d5 elementor-widget elementor-widget-elementskit-creative-button\" data-id=\"6d0167d5\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"elementskit-creative-button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"ekit-wid-con\" >\t\t<div class=\"ekit-btn-wraper\">\n\t\t\t\t\t\t\t\t<a href=\"https:\/\/bestarion.com\/us\/services\/bpo\/outsourced-accounting-services\/\" class=\"ekit_creative_button \" id=\"\" data-text=\"\">\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t<span class=\"ekit_creative_button_text\">Get a Free Trial of 3 Books <\/span>\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/div>\n        <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-579cb86a e-con-full e-flex e-con e-child\" data-id=\"579cb86a\" data-element_type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-26c6452a elementor-widget elementor-widget-image\" data-id=\"26c6452a\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-1024x1024.png\" class=\"attachment-large size-large wp-image-45916\" alt=\"\" srcset=\"https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-1024x1024.png 1024w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-300x300.png 300w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-150x150.png 150w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-768x768.png 768w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-1536x1536.png 1536w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki-710x710.png 710w, https:\/\/bestarion.com\/us\/wp-content\/uploads\/sites\/8\/2025\/01\/Finance-app-rafiki.png 2000w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" title=\"\">\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Discounted Cash Flow (DCF) analysis is a powerful valuation method used to estimate the value of an investment based on its expected future cash flows. It is widely used in finance for business valuation, investment decisions, and capital budgeting. This guide provides an in-depth explanation of the DCF method, its formula, and practical examples. 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