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Experts estimated that the cost of capital applicable to Lockheed's assets (prior to Tri Star) was in the 9%-10% range. Since the Tri Star project
Experts estimated that the cost of capital applicable to Lockheed's assets (prior to Tri Star) was in the 9%-10% range. Since the Tri Star project was quite a bit riskier (by any measure) than the typical Lockheed operation, the appropriate discount rate was almost certainly higher than that. Using 10% should give a reasonable (although possibly generous) estimate of the project's value... Experts estimated that the cost of capital applicable to Lockheed's assets (prior to Tri Star) was in the 9%-10% range. Since the Tri Star project was quite a bit riskier (by any measure) than the typical Lockheed operation, the appropriate discount rate was almost certainly higher than that. Using 10% should give a reasonable (although possibly generous) estimate of the project's value
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