Discounted cash flow (DCF) analysis is a method of valuing a project or asset considering the time value of money.

The value of a rupee in the past is not the same as it is today, and shall not remain the same 10 years ahead in future. It is in this situation that the discounted cash flow analysis helps us find what the exact value of an investment would be years' ahead in terms of rupees as on present date.

DCF is based on the concept of, 'how much money would have to be invested currently, at a given rate of return, to yield the cash flow in future. The discount rate is generally the weighted average cost of capital (WACC), that reflects the risk of the cash flows.