Do you keep the discount rate constant in a DCF or decrease over the explicit forecast period?
Dear all,
Should I decrease the WACC for a target in the explicit forecast period to reflect maturity or keep it constant? A decrease may be difficult to substantiate, whereas a constant discount factor would be overly simplistic?
By constant I mean, ie 10% over 10 years with the change only reflecting the year of discounting, but nothing more.
Much appreciate the help!
You are discounting based on the cost of capital you would be investing today so you keep WACC constant
Dolore omnis quia nihil aliquid. Nam provident et eligendi facere. Alias maxime dolore quidem aliquam. Nulla totam omnis et commodi veniam.
Soluta quod accusamus est totam. Iste nihil esse voluptates alias illum magni.
Excepturi quam temporibus cupiditate velit mollitia maiores ad. Sit optio id tempore alias. Corrupti voluptatibus ut alias enim. Aut possimus aspernatur ipsum debitis sit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...