Research For Defining The Discount Rate And An Empirical Analysis Of It Under Income Present Value Method

The application of income present value method mainly involves three appraisals parameters, namely future cash flows, discount rate and the discount period. Discount rate is the most complex and divergent of them. Discount rate is an important parameter to influence the enterprise value evaluation, and its slight change can cause a very big change in result. In appraisal practice, discount rate lack of accuracy is one of the reasons why the income present value method may be criticized. From the angle of the application of income present value method, this paper discusses discount rate theoretically & empirically, based on the international general evaluation methods and the condition of our country.This paper is divided into six chapters. The background, purposes and meanings are introduced in Chapter I. Chapter II is the research analysis of references related documents and present situations at home and broad. The meaning of the discount rate is introduced in chapter III as well as the characteristic, the supposition, the influence factors of it and discrimination of the close words. Several popular & divergent methods for defining the discount rate and their modificatory models are recommended in chapter IV. Chapter V discusses two methods for defining discount rate, WACC and CAPM, in practice application. With the market surroundings are improved day by day, the latter method has more and more widespread application prospect. Conclusion and the forecast are generalized in chapter VI.Wish that this research lays scientific foundation for determining discount rate more scientifically, reasonably, correctly and objectively.