Question about calculating discount cash flows?

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Question about calculating discount cash flows?

First of all, which cash flow do you use to calcualte the discount cash flow? Is it net cash flow, free cash flow, or operating cash flow?

Secondly, what is an appropriate discount rate to use in calculating discount cash flows? Is it the 30-year bond yield or short term bond yield?

Thank you all

2006-10-27 12:05:39 · 2 answers · asked by RockiesFan 2 in Business & Finance ➔ Investing

2 answers

You can use free cash flow and use the Capital Asset Pricing Model to find the discount rate. Use the ten year treasury bond yield for the risk free rate in the Capital Asset Pricing Model.

2006-10-27 18:59:32 · answer #1 · answered by jeff410 7 · 0⤊ 0⤋

Either the PV of $1 or the PV of an Annuity

2016-05-22 01:49:42 · answer #2 · answered by Anonymous · 0⤊ 0⤋