Cash

Cumulative Cash Flow vs Discounted Cash Flow: A Forex Trading Guide

4 min read

Cumulative cash flow and discounted cash flow are two of the most popular methods of assessing the value of a company in the Forex market. Cumulative cash flow takes into account all cash flows from the current period to eternity, whereas discounted cash flow considers only the present value of future cash flows. The use of either one will depend on the individual investor, as both have their advantages and disadvantages. When the present value of future cash flows is considered, investors will take into account the expected rate of return on the asset, as well as inflation and taxes. Both cumulative cash flow and discounted cash flow will allow investors to determine how well an asset will perform in the future and whether or not it is a worthy investment.