Jim, I often struggle with what discount rate to choose when evaluating a cash flow. I often use 12% and think of that as conservative. In your recent post you however used 15%, even more conservative. What basis(es) do you use when picking a discount rate? Thanks.
What basis(es) do you use when picking a discount rate?Hi dtf,Great question. Does this explain? http://boards.fool.com/more-thoughts-on-discount-rates-28940...I laid out some thinking in that post on discount rates and why I'm using 15% pretty consistently. I'd be eager to discuss it further.For instance, why do you choose 12%? Do you adjust for additional risks inherent in the company (e.g. country of operations, big competition on the horizon, etc.)? When you calculate WACC, is that the rate (or close to it) that you often come to?Cheers,Jim
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