The discount rate Newing is using is not widely understood.
It is basically the rate that you would want to earn on your money as an alternative to investing in something. Newing is not valuing Shares so much as valuing the business and then dividing it by the outstanding shares to get a share price.
If someone were valuing PET with the view to buying it outright they would look at the future eanings from the company and establish a "future value" base on what the company would make over a set number of years. That future value is then brought back to a value that you would be prepared to pay for the company today rather than in, say, four years time. To do that the future value is "discounted" at the rate that you would want to earn on your money elsewhere. Its kind of like a reverse compound interest calculation.
That is why you get a different NPI or net present value if you apply different discount rates. It is more a consideration of what you deem an acceptable "alternative" rate of return, than it is a measure of the company in question.
Difficult concept to explain in a few words and I may have failed miserably. Probably only made sense to the initiated when I was trying to explain to the uninitiated. If you don't make sense of my explanation that would be my poor word and teaching skills.
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