Posts Tagged: "discount rate"

Suppose you are valuing a large patent portfolio with issued patents and pending applications in more than 20 countries throughout the world. One of your tasks would be to project how much royalties each patent could collect in each of the subject countries over time. After plotting out your expected revenue streams, you would have to apply a discount rate to these projected royalty revenue streams to reflect the risks associated with entering into governing licensing agreements. Which risks are embodied in discount rates (also known as costs of capital)?