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Discount Rate—Explanation, Definition and Examples

Valutico

To refine the selection of the discount rate, it’s important to draw on inputs from credible sources regarding economic, industry and company specific risk factors. The WACC represents the overall cost of financing a company’s operations and is used to discount future cash flows to their present value.

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What is the Capital Asset Pricing Model (CAPM)?

Andrew Stolz

When an investor buys a particular security, they consider the risk of that security relative to the riskiness of the overall market and adjust the equity risk premium up or down by using Beta. Investments are exposed to two types of risk: systematic and unsystematic. beta of a stock). E(r) = Rf + ??(Rm