Hi all! So I’m working through the EOCs and found many things I don’t understand/agree with the solutions. In problem 4, Food Processors Inc, question C, page 433, book 2; the answer is the discount rate should be between 6%-7%. However, the projected yield of intermediate Treasury is 5% and long term Treasury is 6%. I thought it would be fair to use the discount rate between 5% and 6% considering average age is 45 which gives a horizon of 20 years max. What are your opinions on this? Please help me. Thanks!
Since long term forecast is 6%, I would go as low as 6.