Discount rate to be used in Discounted Cash Flow


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Hi,

In reality, when we would like to value a company using Discounted Cash Flow method, how do we derive the discount rate? and how do we know that if that discount rate used is reasonable?:confused:

Thank you.
 
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The Finance Writer

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A reasonable discount rate is the rate available from an alternative to investing in the company. That's a fairly wide open selection by encompassing anything you can reasonably justify. The justification is how you know the selected discount rate is reasonable.
 

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