Discounted cash flow methods incorporate compound interest by assuming that companies will reinvest future cash flows when they are received.

Question

Quizplus · Accepted Answer

Discounted cash flow methods involve calculating the present value of future cash flows, and assumes that these future cash flows can be reinvested to generate additional returns or compound interest. This allows for a more accurate determination of the value of an investment or company.

Discounted Cash Flow Methods Incorporate Compound Interest by Assuming That