When I was taught DCF calculations a million years ago, the question arose of what interest rate to use to calculate the discount factors. Our lecturer said something like “it ought to exceed the firm’s cost of capital by some comfortable margin, but you can view it as an arbitrary number laid down on high”. Apparently as an afterthought he said “In this class we’ll use 8.4% p.a.” “Why?” we asked. “It’ll make you interpolate in your tables.”I admired his intellectual rigour.

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