There are many indicators used in determining a company's net worth. These same indicators are used if a company's future earning is ever in question. Discount rates are used to fill the void of such future earnings that may have been lost by circumstances out of the company's control. The Discount rate reflects the rate of the payee rather than the one being paid. The strength of the company determines the size of the discount …
showed first 75 words of 486 total

showed last 75 words of 486 total
…would be better reflected by using for the discount rate a higher rate of return promised for high-risk investments. The markets today rely heavily on businesses future earning potential. Stock prices are assessed using the model of what may be. If ever faced with unforeseen circumstances caused by no fault of that business; they must be compensated by the offender. Using discount rates coupled with probable future earnings is the best method for determining compensation.