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Discount Rates

In: Intangibles in the World of Transfer Pricing

Author

Listed:
  • Marc C. Hübscher

    (Deloitte GmbH)

  • Björn Heidecke

    (Deloitte GmbH)

Abstract

The discount rate is a crucial factor for valuing intangibles and needs to be considered in most of the approaches described. This chapter outlines how the discount rate can be calculated. In particular, it explains how the weighted cost of capital (“WACC”) is determined. WACC is typically applied when discounting cash flows with DCF models. The CAPM model is used to calculate the cost of equity, which along with the cost of debt is required to calculate the WACC.

Suggested Citation

  • Marc C. Hübscher & Björn Heidecke, 2021. "Discount Rates," Springer Books, in: Björn Heidecke & Marc C. Hübscher & Richard Schmidtke & Martin Schmitt (ed.), Intangibles in the World of Transfer Pricing, edition 1, pages 355-363, Springer.
    • Handle: RePEc:spr:sprchp:978-3-319-73332-6_21
    DOI: 10.1007/978-3-319-73332-6_21
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    Keywords

    Discount rate; WACC; CAPM;
    All these keywords.

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