In 100 words or more reply to the statement below about discounted cash flow

• Discounted cash flow is the process by which the present value of cash flows is determined. By understanding this method it can help you determine whether or not an investment may be worth taking on as it looks at the future of cash flow and discounts it to make it the present value estimate then which can the be used to make that decision. The point of doing this method is to understand how much money would be received from making an investment with having the understanding that overtime the value of money changes. It is important to understand the value of the investment as time changes because that could really make the difference whether or not an investment is sought after or not. As a rule of thumb the present value of an investment future cash flow should be the higher a company is willing to pay for the investment and then expect the required rate of return. Although that will give you the rate of return some companies may be flexible with this depending on the situation that they are facing.