Would you use a higher or lower discount rate for a company that generates no profit now, but will do so in the future?
Would you use a higher or lower discount rate for a company that generates no profit now, but will do so in the future?
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Having no profit now massively impacts cost of equity and cost of debt. You're talking about a risk premium, and a business that makes no profit has a bunch of risks. In early stage companies, I've seen WACCs of 50+% if there is funding risk.
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