DCF Formula
The general formula for DCF is,
[Tex]DCF=\frac{CF_1}{(1+r)^1}+\frac{CF_2}{(1+r)^2}+\frac{CF_3}{(1+r)^3}+…+\frac{CF_n}{(1+r)^n}[/Tex]
where,
- DCF = Discounted Cash Flow, representing the present value of all future cash flows.
- CFi = Cash flow in period
- r = Discount rate or required rate of return, representing the opportunity cost of capital.
- n = Number of periods into the future.
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