DCF investment horizon


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Posted by just an opinion on March 28, 19101 at 16:58:09:

The investment horizon for measuring future free cash flows should be tied to the risk-free rate of return. As an example---if the risk-free rate is 5%, then the investment horizon one would look at is 20 years. This would be the length of time the investor is naturally evaluating an investment. Over the past decades, the investment horizon has been around 14 years, which highly correlates to the risk-free rate of 7% over the same time frame. Hope this helps a little.


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