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Finance - NPV, Discount rate, WACC watch

    • Thread Starter

    just a quick question.

    The NPV is about looking at future cash flow in terms of present value. So it uses a discount rate to discount future cash flow.Finance books say the WACC is used to determine the discount rate.

    SO my question is, what does the cost of capital got to do with converting future cash flows into present value? What is the link? Why not taking simply inflation as a discount rate?

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