What is DCF and why do we calculate DCF?

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A discounted cash flow (DCF) is a valuation method used to estimate the attractiveness
of an investment opportunity. DCF analysis uses future free cash flow projections and
discounts them to arrive at a present value estimate, which is used to evaluate the
potential for investment. If the value arrived at through DCF analysis is higher than the
current cost of the investment, the opportunity may be a good one.