Practice Question
The Discounted Cash Flow (DCF) method primarily focuses on estimating the value of future cash flows.
Answer +
TRUE
Step-by-step solutions +
Step 1: Understand the purpose of the DCF method.
The DCF method is a fundamental valuation technique used in finance to assess the value of an investment.
Step 2: Identify what the DCF method evaluates.
It focuses on projecting future cash flows and then discounting them back to their present value using a specified discount rate.
Step 3: Conclusion
Because the DCF method centers on estimating and discounting future cash flows to determine current value, the statement is TRUE.