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It's been a while since my finance classes but I 
believe it is better to use your required rate of
return (ROR) rather than the risk free rate to
determine the NPV of a series of cash flows.  

For example, if company ABC has earnings (or cash flow)
of $1 this year, will grow 10% for 20 years, and then
suddenly go out of business with no residual value, 
you get the following NPVs.

Discount Type    Discount Rate       NPV
RFR                  6%            $29.09
ROR                 12%            $16.94

The NPV is what YOU would pay today.  If you only want
to make 6% on company ABC then you can pay $29.  If you 
want to make 12% then you can only pay $17.  

However, the real key is not evaluation the cash flow
or earnings but the assumptions.  $x earnings now, y%
growth rate, etc.  The reason many people look at other
statistics such as Flow ratio, cash to debt, etc. is to
fill in the assumptions.  They may not be doing so
explicitly but this is really what they're getting to.

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