Discounted Cash Flows (Actualisation des flux monétaires)

Discounting is the calculation of the present value of a future sum. Discounting is thus the inverse to capitalisation. Discounting makes it possible to compare sums received or paid out at different dates. Discounting is calculated with the required rate of return of the investor. The discounting formula runs as follows: Pv = Fv / (1 + i)n Where: Vn = Future cash flow or value Pv = Present value i = Discount rate or Rate of return on capital per period n = Number of periods that payment shall be differed