Discounted cash flow


The method of calculating the net present value of a stream of payments by adding the present discounted values of all net cash flows at various future dates.

For example, if the payments are obtained from an investment project, then this will be the case if the construction takes time and there is a running-in-period before the prosject is expected to make a profit. There may also be decommission costs at the end of the project.


Reference: Oxford Press Dictonary of Economics, 5th edt.