Discounted cash flow (DCF) is a financial valuation method used to estimate the value of an investment based on its expected future cash flows. It involves projecting the cash flows the investment will generate over time and then discounting them back to their present value using a specific rate, often reflecting the risk of the investment. The discounting process accounts for the time value of money, which means that a dollar received today is worth more than a dollar received in the future. By calculating the present value of future cash flows, investors can make informed decisions about whether an investment is worthwhile compared to its current cost.