A company used a 19% nominal discount rate toevaluate a new project. However, their advisor said that the normal discount rate for this industry is 13% but because of the different characteristics of the market, the higher discount rate is appropriate.

 

Question: Should the company use a different discount rate from other companies in that industry? If so, why, and what discount rate should they use?

Answer rating: 100% (QA)

Whether the company should use a different discount rate from other companies in the industry depends on various factors related to the project the co... View the full answer