How to Create a Discounted Cash Flow - DCF

The video tutorial explains the concept of discounted cash flow (DCF) and its importance in financial modeling. It guides viewers through setting up an Excel spreadsheet to calculate DCF, incorporating interest and inflation rates, and understanding the real interest rate. The tutorial also covers creating a discounted cash flow table, calculating net present value (NPV), and determining the internal rate of return (IRR). The video concludes with practical applications of DCF in project management.

What is the purpose of modeling cash flows in an organization?

What is a discounted cash flow and why is it important?

Explain the significance of the interest rate in calculating future cash flows.

How does inflation affect the value of money over time?

What formula is used to calculate the present value of future cash flows?

How do you determine the net present value (NPV) of a project?

What is the internal rate of return (IRR) and how is it calculated?

Discuss the impact of risk on the internal rate of return.

What is the equivalent annual cost and how is it calculated?

Why is it important for project managers to understand discounted cash flows?