Editing Discounted cash flow (section)

==Application==
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On a very high level, the main elements in valuing a corporate by Discounted Cash Flow are as follows; see [[Valuation using discounted cash flows]], and graphics below, for detail:
* '''Free Cash Flow Projections:''' Projections of the amount of Cash produced by a company's business operations after paying for operating expenses and capital expenditures.<ref name=":0">{{Cite web|url=http://www.streetofwalls.com/finance-training-courses/investment-banking-technical-training/discounted-cash-flow-analysis/|title=Discounted Cash Flow Analysis {{!}} Street of Walls|website=streetofwalls.com|access-date=2019-10-07}}</ref>
* '''Discount Rate:''' The cost of capital (Debt and Equity) for the business. This rate, which acts like an interest rate on future Cash inflows, is used to convert them into current dollar equivalents.
* '''Terminal Value:''' The value of a business at the end of the projection period (typical for a DCF analysis is either a 5-year projection period or, occasionally, a 10-year projection period).<ref name=":0" />
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[[File:DCFMDPD.gif|thumb|[[Flowchart]] for a typical DCF valuation, with each step detailed in the text (click on image to see at full size)]]
[[File:DCFM Calculator.JPG|thumb|Here, a [[spreadsheet]] valuation, uses [[Free cash flow]]s to estimate stock's [[Fair Value]] and measure the [[sensitivity analysis|sensitivity]] of [[Weighted average cost of capital|WACC]] and [[Dividend discount model|Perpetual growth]] ]]

In '''discount cash flow analysis''', all future cash flows are estimated and [[Discounting|discounted]] by using [[cost of capital]] to give their [[present value]]s (PVs). The sum of all future cash flows, both incoming and outgoing, is the [[net present value]] (NPV), which is taken as the value of the cash flows in question;<ref>{{Cite web |url = http://www.wallstreetoasis.com/finance-dictionary/what-is-a-discounted-cash-flow-DCF |title = Wall Street Oasis (DCF)|access-date = 5 February 2015|website = Wall Street Oasis}}</ref>
see aside.

For further context see {{slink|Valuation (finance)|Valuation overview}}; 
and for the mechanics see [[valuation using discounted cash flows]], which includes modifications typical for [[startup]]s, [[private equity]] and [[venture capital]], [[corporate finance]] "projects", and [[mergers and acquisitions]].

Using DCF analysis to compute the NPV takes as input cash flows and a discount rate and gives as output a present value. The opposite process takes cash flows and a price ([[present value]]) as inputs, and provides as output the discount rate; this is used in bond markets to obtain the [[Yield (finance)|yield]].