... even if is properly applied, but in many cases, corporations misapply the entire concept because of the failure to grasp the underlying issues. Adding risk premiums to the discount rate distorts the DCF analysis in favor of short-run projects for several reasons, according to Professor Myers...

... appropriate ror risk management project valuation weighting weighted average cost exploration risk premium society of petroleum engineers ror discount rate hurdle rate asset and portfolio management upstream oil & gas repatriation project economics risk-ror relationship investment beta...

... Plus Premium Approach (BPP) This is essentially an ad hoc, subjective procedure. The method uses the interest-rate on the firm's long term bond to which is added a risk premium of 4% or so to estimate the firm's cost of equity. The implied assumption that firms with risky, low rated, and consequently...