4 ms·

I'm curious - how did you determine defensible discount rates at McKinsey?

• kapilkale 11y ago
  Former Bain consultant. We used comps from public companies to sense-check things. The interest rate for an energy conglomerate would not be something you would also use for a non-diversified tech company like Dropbox. As long as we could sell the number (both internally and to the client). But within like OP said, the range of defensible numbers is still quite wide.
  • porter 11y ago
    Did you ever use WACC, or is that not realistic?
    • hmahncke 11y ago
      We did use WACC, which invariably led to arguments about how to correctly calculate WACC as well. For a division of a large company, it can be non-trivial to decide what the appropriate WACC is.