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Discounted Future Earnings

In a DCF valuation, a discount rate is chosen which reflects the risk (the higher the risk the higher the discount rate) and this is used to discount all forecast future cash flows to calculate a present value: PV = (CF1)/(1+r) + (CF2)/((1+r)2) + (CF3)/((1+r)3)... where PV is the present value of the stream of cash flows CF1 is the cash flow the investor receives in the first year, CF2 the cash flow the investor receives in the second year etc. and r is the discount rate.

BusinessModel™ is a free business plan dashboard in the cloud. It permits entrepreneurs, SMB's, investors, and other stakeholders to create, manage and collaborate a dynamic living business plan complete with financials, documents, project management and integrated blog, wiki's, posts, and grouping to keep all parties informed based on individual permissions and personal preference of notifications.