PSX Intrinsic Value (DCF) Calculator

The discount rate is typically linked to the opportunity cost of capital. Since you can earn 18-22% in safe government bonds (T-Bills) or National Savings in Pakistan, an equity investment must offer a higher potential return to justify the risk.

A common rule of thumb in value investing is to look for a 20% to 30% Margin of Safety. This provides a cushion in case your growth assumptions are too optimistic or the economy faces a downturn.

Terminal growth should ideally be lower than the long-term GDP growth or inflation rate of the country. For Pakistan, a rate between 5% and 10% is often used for mature companies.