The structure of the discount rate for the purposes of assessing business

One of the most common and frequently used approaches to business valuation is the income approach. The most significant impact on the value of the business obtained by the income approach is the choice of the cash flow discount rate or as part of the capitalization ratio. In addition, the discount rate is indispensable in assessing the effectiveness of investments and in other calculations that require cost reduction. Therefore, the accuracy and adequacy of the assessment depends on the correctness of the use of methods for constructing the discount rate.