article thumbnail

Discount Rate—Explanation, Definition and Examples

Valutico

Key takeaways: The discount rate is primarily used by central banks to manage the economy and investors to calculate the present value of future cash flows from an investment. It’s vital to determine the correct discount rate for company valuation, factoring in the time value of money. In this article, we cover the latter.

article thumbnail

Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The Cost of Capital is then used to discount future expected cash flows to arrive at a present value – the valuation of the business using the Discounted Cash Flow method, a leading valuation technique. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The Cost of Capital is then used to discount future expected cash flows to arrive at a present value – the valuation of the business using the Discounted Cash Flow method, a leading valuation technique. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

article thumbnail

Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The Cost of Capital is then used to discount future expected cash flows to arrive at a present value – the valuation of the business using the Discounted Cash Flow method, a leading valuation technique. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).