Syndicate
General Formula for the Discounted Cash Flow
We can also use the previous explanation to calculate the present value of a group of cash flows or future values to be received within the next years.
So, the value of an asset is equal to the value of the cash flow that the asset promises discounted at a rate according to the risk (or uncertainty) of those cash flows. If they are totally safe, they do not have any risk, they will be discounted to the risk free rate; the rate will grow as the cash flow becomes more uncertain.