What is the appropriate discount rate to use in an unlevered DCF analysis

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Accepted Answer

The appropriate discount rate for an unlevered DCF analysis is the weighted average cost of capital (WACC).

The WACC is the rate at which a company's future cash flows are discounted to their present value.
It is calculated by taking the weighted average of the cost of equity and the cost of debt.
The cost of equity is calculated using the capital asset pricing model (CAPM), while the cost of debt is the interest rate on the company's debt.
The WACC reflects the risk of the company's operations and the cost of financing those operations.
It is important to use an appropriate WACC in order to accurately value the company and make informed investment decisions.

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