2  Supporting Theory

There is a considerable body of literature regarding Discounted Cash Flow (DCF) Analysis.  Most of this literature deals with the use of Discount Rates in the context of commercial business, or investment evaluation, or for public policy in the cost-benefit analysis of policy proposals.  It is not necessary for practitioners to have specialist knowledge of the available techniques and theoretical background to apply the Methodology.  While it is assumed that practitioners are familiar with the basic tools and concepts of financial analysis and DCF methodology, Section 2.1 restates some simple DCF concepts, to ensure all readers have a common grounding.

This Section is designed as a reference source to ensure that the theoretical platform of the Methodology is clearly understood and to assist practitioners that do not have a background in this type of financial analysis in applying the Methodology.  Once practitioners are familiar with its contents, it is likely that this Section would only be used as a specific reference as required.

For practitioners seeking to undertake further background reading, a list of suggested reference texts and additional guidance material is included as Appendix F.