Determining a Distressed Debtor Company Discount Rate (Part 2)
Michael D. Pakter, CA, CPA, CFE, CIRA, CDBV, CFF, CFFA, CVA, CGMA
The cost of capital represents the required return that must be earned if the value of the entity at issue is to remain unchanged. Cash flows are discounted at the cost of capital to determine the value of the emerging entity. A debtor company’s capital ...