Discounted Cash Flow Methods

Uwe Götze, Deryl Northcott and Peter Schuster
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Uwe Götze: Technische Universität Chemnitz
Deryl Northcott: The Auckland University of Technology
Peter Schuster: Schmalkalden University of Applied Sciences

Chapter 3 in Investment Appraisal, 2015, pp 47-83 from Springer

Abstract: Abstract The discounted cash flow methods described in this chapter are classified as ‘dynamic’ investment appraisal methods, which, unlike the static methods described in Chap. 2 , explicitly consider more than one time period and acknowledge the time value of money. Investment projects can be described as streams of (expected) cash inflows and outflows over the whole course of their economic life, i.e. over different time periods. Methods described and discussed in this chapter are the net present value method, the annuity method, the internal rate of return method and the dynamic payback period method. All of them are subject to a set of assumptions that are also discussed in this part.

Keywords: Cash Flow; Investment Project; Relative Profitability; Cash Inflow; Cash Outflow (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/978-3-662-45851-8_3

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