Free Cash Flow represents the cash generated by an asset, group of assets, or business enterprise over a period. It is a measure of the cash available to a business entity for discretionary uses after deducting all the funds needed to continue operating at a planned level. Under the discounted cash flow method, it is the free cash flow (not the net cash flow) which is discounted by the weighted average cost of capital to arrive at the fair market value. The free cash flow is computed as: Revenue -Direct Costs -Operating Expenses =EBIT -Taxes =Debt-Free Net Income +Depreciation, Amortisation and Deferred Charges - /+ Change in Net Working Capital -Capital Investment =Debt-free Cash Flow