Discounted Cash Flow

A financial term referring to the value of an investment adjusted for the time value of money. Since money loses value over time, future cash to be received must be discounted to express its present value (today) in order to properly determine the value of a company or project under consideration. As the payment gets further into the future, its present value drops. Also, increasing the interest rate would further reduce the present value. It is an important criterion in evaluating or comparing investments or purchases; other things being equal, the purchase or investment associated with the larger DCF is the better decision.
Discounted Cash Flow relates to Sustainability in a powerful way. Human-made capital provides diminishing utility as it depreciates over time. Natural capital, which includes the planet itself, all minerals, all species, water, soil and air, does not depreciate over time, and theoretically may provide positive utility over time periods that tend towards infinity.

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