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Discount Rate—Explanation, Definition and Examples

Valutico

The discount rate effectively encapsulates the risk associated with an investment; riskier investments attract a higher discount rate. Different types of discount rates such as risk-free rate, cost of equity, or cost of debt, are used contextually in financial analysis.

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Use of Discounted Cash Flow Approaches in US GAAP Accounting

ThomsonReuters

Discounted cash flow approaches are a helpful tool used in US GAAP accounting for valuation and impairment assessments. A discounted cash flow approach involves projecting a stream of cash flows for an item and then applying a discount rate to those cash flows to calculate a single value or a range of values for that item.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

What is The Discounted Cash Flow Method? This complete guide to the discounted cash flow (DCF) method is broken down into small and simple steps to help you understand the main ideas. . What is the Discounted Cash Flow Method? What is the discounted cash flow method?

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What is Beta in Finance, and why is it Essential for a Business Valuation?

Equilest

One of the common models for valuing companies is the discounted cash flow model - DCF. To evaluate a company's value, using the cash flow discounting method, the future cash flows that the firm will generate must be estimated and capitalized at a discount rate appropriate to the firm's risk.

Beta 40
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Data Update 4 for 2021: The Hurdle Rate Question!

Musings on Markets

The answer, to me, seems to be obviously yes, though there are still some who argue otherwise, usually with the argument that country risk can be diversified away. In that post, I computed the equity risk premium for the S&P 500 at the start of 2021 to be 4.72%, using a forward-looking, dynamic measure. as mature markets.