Calculating discretionary cash flow To calculate discretionary cash flow, start with the company's pre-tax earnings. Next, add back in all non-operating expenses and subtract non-operating income.

Calculating free cash flow starts with figuring operating cash flow. To figure operating cash flow, subtract operating expenses from total sales.

To calculate the present value of any cash flow, you need the formula below: Present value = Expected Cash Flow ÷ (1+Discount Rate)^Number of periods Thus, for year one, the math would look like ...

Calculating the IRR for a project with an initial outlay and single cash flow is very easy to do. It's also very practical for measuring the returns.