Also called PV
Present value
What a future year's free cash flow is worth in today's money.
How it is calculated
Present value = future cash flow × discount factor
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Discount factor — How much a dollar arriving in year t is worth today, adjusted to mid-year because cash arrives through the year rather than all on 31 December.
- Sum of PV — Every discounted free cash flow across the explicit projection horizon, added up. Everything after the horizon is handled by the terminal value instead.
- WACC — Cost of equity and cost of debt blended by how much of each the company uses. This is the rate every future dollar is discounted at, and it is the single most leveraged input in the model.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
