The discounted cash flow (dcf) method

Discounted cash flow analysis is a valuation method that determines the profitability, or mere viability, of an investment by examining projected future income (and expenses) or cash flow from the investment, and then discounting that cash flow back to arrive at an estimated current value of the investment.

This method also allows you to appreciate the value of a property over a given period of time taking into account its future net income.

The surveyor takes into account the cashflow, indexation and reversions projected during the period of study under review, as well as the potential end-of-period resale value.

All cashflows are brought back to present value using a discount rate.