The determination of the discount rate used in valuations and impairment testing is a key valuation input and one which will normally be reviewed in detail by a company’s auditors. Relatively small changes in the discount rate can have a material impact on the value of a business or asset so it is important that the rate is properly supported.
At City Valuation Advisory, we provide clients with advice on the inputs and calculation of the discount rate. We also provide assistance with benchmarking a company’s discount rate by providing analysis and support for inputs including:
- Risk free rate
- Market risk premium
- Beta factors
- Cost of debt
- Small company premium
- Alpha factors
We also provide training sessions on discount rate determination.