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Discounted cash flow (DCF) is a method to value a security, project, company, or asset based on the time value of money. Learn the main elements, history, mathematics, and applications of DCF analysis in finance and economics.
Learn what cost-effectiveness analysis (CEA) is, how it compares different courses of action based on costs and outcomes, and how it is applied in various fields. Find out the difference between CEA and cost–benefit analysis, and see examples of CEA in health, military, and energy.
Learn how to estimate the current value of a company based on projected future cash flows adjusted for the time value of money. See the basic formula, a worked example, and modifications for different contexts and sectors.
Net present value (NPV) is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows. NPV takes into account the time value of money and the discount rate to evaluate and compare capital projects or financial products.
Learn what social discount rate is, how it is used in cost–benefit analysis, and what factors affect its calculation. Compare different approaches and controversies in choosing the social discount rate for social projects.
The discount rate is commonly used for U.S. Treasury bills and similar financial instruments. For example, consider a government bond that sells for $95 ('balance' in the bond at the start of period) and pays $100 ('balance' in the bond at the end of period) in a year's time. The discount rate is
Discounts and allowances are reductions to a basic price of goods or services.. They can occur anywhere in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer ...
Discounting is a mechanism in finance that allows a debtor to delay payments to a creditor in exchange for a fee. The fee is based on the discount rate, which is the rate of return the creditor could earn on a similar investment. Learn how to calculate the present value and the discount factor of future cash flows.