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Determining Discount Rate for Companies with Negative Initial Cash Flows and Future Growth

Wizenius

Adjustments for Negative Cash Flows: Incorporate adjustments in the DCF analysis to account for the negative cash flows in the initial years. Adjust the risk-free rate, such as the yield on government bonds, to account for the risk associated with the company's cash flow projections and future performance.

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M&A Blog #15 – valuation (tools and data preparation)

Francine Way

Target’s primary country (where the company is likely to borrow) risk-free rate: Can be obtained from government sources such as Treasury.gov’s 10-years Treasury Bond Yield. Information listed in the DCF analysis: See the items listed under DCF above. Different sources will cite different betas for the same company.

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