Conceptual Problems in the Use of Risk-adjusted Discount Rates.

The difficulty of considering continuous processes, as well as the problem of determining the premium for risk, discourage common use of the risk-adjusted discount rate method.

Such a dependence is characteristic for a risk-adjusted discount rate (it connects money value change over time with risk represented by a premium for risk).

international transfers by Japanese-based corporations, Indian perspectives on technology transfer, the impact of foreign takeovers on innovation and productivity, technology transfer and improved health, acquiring technology for global competition, valuing technology in South Korea,

risk-adjusted discount rates for small-sized venture firms, and technology transfer in China.

Table 2 shows the risk-adjusted discount rates for various input values.

2000) established a risk-adjusted discount rate for a supply chain network model, but not for a specific facility.

For this reason, we will use un-leveraged beta to estimate the risk-adjusted discount rate.

15) The proposition that risk-adjusted discount rates and certainty equivalents yield identical net present values is shown in Stapleton (1971).

In the fist, we discount expected cash flows on an asset (or a business) at a risk-adjusted discount rate to arrive at the value of the asset.

This further allows the use of appropriately

risk-adjusted discount rates for each class of cash flows to be used, leading to a more precise and accurate valuation framework.

For example, Fama's [9] analysis implies that one can justify the use of risk-adjusted discount rates to value a level perpetuity by assuming that each period's expected operating cash flows follow a geometric random walk.

When risk-adjusted discount rate are appropriate (see [9], [24], [28]), (A5) can also be written in the more familiar form of Equation (7) in the text.