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
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