Discounted Cash Flow

Abstract

In recent times, the term ‘cash flow’ has been used in fairly common parlance — usually connected with a crisis — but managerial economists and analysts have used cash flow analysis in connection with business investments for many years. Stated simply, it can be considered as the total funds generated from operations — that is, the revenue received and the expenditure incurred, including initial cost, in an investment project; a project may be the purchase of a relatively small item of office equipment or a major property development scheme.