Discounted After-Tax Cash Flow


DEFINITION of 'Discounted After-Tax Cash Flow'

An approach to valuing an investment that looks at the amount of money it generates and takes into account the cost of capital and the investor's marginal tax rate. Discounted after-tax cash flow is similar to simple discounted cash flow (DCF), but tax implications are also taken into consideration. Because there are many different methods for valuing an investment, and each method has its shortcomings, investors should not rely solely on discounted after tax cash flow to make a decision.

BREAKING DOWN 'Discounted After-Tax Cash Flow'

For example, discounted after-tax cash flow can be used in real estate valuation to determine whether a particular property is likely to be a good investment. Investors must consider depreciation, the tax bracket of the entity that will own the property and any interest payments when using this valuation method. To examine the property's value from multiple perspectives., you can also use other methods of real estate valuation such as the cost approach, sale comparison approach and income approach.

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  3. Cash Flow

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  4. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present ...
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    The price an asset would fetch in the marketplace. Market value ...
  6. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
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  1. How can companies use the cash flow statement to mislead investors?

    Cash flow is a means for most investors to examine the actual economics of a business they might invest in, especially from ... Read Full Answer >>
  2. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  3. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
  4. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  5. How do dividends affect the balance sheet?

    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>
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    It is a company's board of directors who actually declares a dividend. The declaration date is the first of four important ... Read Full Answer >>

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