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Real talk: Discounted cash flows

Real talk: Discounted cash flows - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Real talk: Discounted cash flows

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- Okay so I'm back with Kevin, and we're gonna talk about, discounted cash flows this time. And so Kevin when I use the term discounted cash flows, what does that mean to you? - To me it's all about making an investment analysis and trying to figure out, okay, hey, which one is the better option, if I've got two lined up? - Okay. And so part of a discounted cash flow is making sure that discount rate makes sense. And, you know, not everyone has time to calculate that weighted average cost of capital even though that is, technically, a best practice. But how do you calculate a discount rate? - The best thing that I like to do, is I look at what are I'm I realistically expecting to return in the market with whatever investments or projects we're doing? Because to me it's not just a matter of growing businesses but it's also a matter of investing for future retirement purposes, and taking money from today and basically putting it at the side for tomorrow. If I think those real estate…

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