Financial Analysis Question
When using discounted cash flow analysis on a stock, should I use the same discount rate for ALL companies?
Asked by ThaDRAGN in
Financial Analysis
4 months ago
Best Answer
272 points
Intern answered 3 months ago …
Many people would say it depends on how "risky" the investment is. The higher the risk, the higher the discount rate.
But if you're investing in a business that you understand, is in a mature industry and has competent management, then you should use the same hurdle rate/discount rate for each investment (in my opinion).
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