The Improvement Research On The Discount Rate Model

With the development of the industry’s asset valuation, asset valuation is gaining moreand more recognition, but also get a lot of use in the industry has become an important part ofmodern economic development. In assessing the current practice, the income approach iswidely movement to various assessment projects, such as business valuation, intangible assetsevaluation, it is essential for the accuracy of their results. In the evaluation of the use of theincome approach, there are three important parameters, namely the expected benefits, thediscount period and discount rate. This article will improve analysis of the discount rate whichis calculated, so that the results are more accurate forecasts.The risk of cumulative method, the capital asset pricing model and the weighted cost ofcapital model has been widely used in the discount rate asset valuation method to determinethe gain, however, there are many of its inadequacies in the process of determining eachmodel. In the current evaluation process to assess the firm only predict the discount rate as thediscount rate for the entire year earnings period, this approach to assess the accuracy of theresults have a great impact. Factors affecting the discount rate has a lot, this article willintroduce through inflation factors in the process of determining the discount rate. Inflation inthe face of increasingly serious situation, the revenue forecast of inflation, the discount rate isintroduced, so that we can get a more accurate prediction results, in order to achieve furtherstandardize the assessment process.This article includes the following parts. First, determine the discount rate for an overviewof the three models. Next, the basic theory of inflation, classification and causes aredescribed, on the basis of the analysis on China’s inflation forecasts derived inflation willcontinue to exist for some time in the future, the conclusions and further determine thediscount rate calculation process the importance and necessity of considering inflation factors.Based on the above rationale, the discount rate for the calculation model proposedimprovements. Improved methods are divided into the following specific steps, the first stepbeing evaluated according to the characteristics of assets, select the appropriate indices asindicators of inflation, inflation indicators are commonly used consumer price index, producer price index and GDP discount rate. The second, by the time series model to predictthe inflation index gains during the period, including data analysis, model selection, modeltesting and predictive analysis. Finally, the discount rate adjustment formula, according tothe predictions of the adjusted income of the discount rate, to arrive by the inflationaryimpact of the discount rate, the discount rate to determine the reach of model improvement.Finally, this section of the discount rate on an assessment of patent cases adjusted data werecompared before and after adjusting, further proof of the importance of the impact ofinflation adjusted discount rate.The final part summarizes the discount rate to determine the problems existing, and thedevelopment of asset appraisal industry some suggestions.