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A popular mechanism of quantifying the Present Value of the future Cash Flow

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body--uriencoded--\mbox%7BCF%7D
:

LaTeX Math Block
anchorDCF
alignmentleft
\mbox{DCF} = \mbox{PV}_r[\mbox{CF}] = \sum_{t=0}
^N
^T \mbox{CF}_i =
\frac{\mbox{CF}_1}{(1+r)}  + \frac{\mbox{FF}_2}{(1+r)^2} 
+ \frac{\mbox{CF}_3}{(1+r)^3} + ...
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anchor0GNGF
alignmentleft
\mbox{DCF}_i =  \frac{\mbox{CF}_{t_i}}{(1+r)^t}

where

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bodynT

total number of accounting periods 

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bodyi= 0, 1, 2, 3, ...

running number of accounting period (usually 1 year)

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bodyr

discount rate

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body--uriencoded--\mbox%7BCF%7D_i

Cash Flow generated during the

LaTeX Math Inline
bodyi
-th accounting period

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body--uriencoded--\mbox%7BDCF%7D_i

discounted value of Cash Flow generated during the

LaTeX Math Inline
bodyi
-th accounting period

LaTeX Math Inline
body--uriencoded--\mbox%7BDCF%7D

discounted value of total cash generated over "n" accounting periods

LaTeX Math Inline
body--uriencoded--\mbox%7BPV%7D_r[CF]

Present Value  of future cash flows 

LaTeX Math Inline
body--uriencoded--\mbox%7BCF%7D
 at discount rate
LaTeX Math Inline
bodyr

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