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Using DCF analysis to compute the NPV takes as input cash flows and a discount rate and gives as output a present value. The opposite process takes cash flows and a price ( present value) as inputs, and provides as output the discount rate; this is used in bond markets to obtain the yield .
It compares the present value of money today to the present value of money in the future, taking inflation and returns into account. The NPV of a sequence of cash flows takes as input the cash flows and a discount rate or discount curve and outputs a present value, which is the current fair price.
The discount, or charge, is the difference between the original amount owed in the present and the amount that has to be paid in the future to settle the debt. The discount is usually associated with a discount rate, which is also called the discount yield.
In economics and finance, present value (PV), also known as present discounted value, is the value of an expected income stream determined as of the date of valuation.
Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period , together with a continuing or terminal value that represents the cash flow ...
The concept of the stochastic discount factor (SDF) is used in financial economics and mathematical finance. The name derives from the price of an asset being computable by "discounting" the future cash flow ~ by the stochastic factor ~, and then taking the expectation.