The discounted cash flow (DCF) model is a financial valuation method used to estimate the value of an investment based on its expected future cash flows. It calculates the present value of these cash flows by applying a discount rate, which reflects the risk and time value of money. This helps investors determine whether an investment is worth pursuing. In the DCF model, future cash flows are projected over a specific period, and a terminal value is often calculated to account for cash flows beyond that period. By summing the present values of all cash flows, investors can assess the overall value of the investment and make informed decisions.