The

**discount rate**is the**rate**of return used in a**discounted**cash flow analysis to**determine**the present value of future cash flows. This**rate**of return (r) in the above formula is the**discount rate**.Just so, what is the discounted cash flow method of valuation?

Finance professionals often use the

**discounted cash flow**(**DCF**)**valuation method**to determine the attractiveness of an investment opportunity.**DCF**analysis uses future free**cash flow**(FCF) projections and discounts them to estimate the present value, which is then used to evaluate the investment potential.What is the formula for WACC?

Definition of

**WACC**. A firm's Weighted Average Cost of Capital (**WACC**) represents its blended cost of capital across all sources, including common shares, preferred shares, and debt.**WACC**is used in financial modeling as the discount rate to calculate the net present value of a business.What is terminal value in DCF?

**Terminal value**is the

**value**of a project's expected cash flow beyond the explicit forecast horizon. An estimate of

**terminal value**is critical in financial modelling as it accounts for a large percentage of the project

**value**in a

**discounted cash flow**valuation.