Interest Rates and DCF Valuation

This problem tests your understanding of the link between discount rates, present value, and intrinsic valuation. In a DCF, interviewers want to see that you know how the risk-free rate feeds into the discount rate and why lower rates generally make future cash flows worth more today, while higher rates do the opposite. It also checks whether you understand the debate around using current market rates versus a normalized risk-free rate, which is a common issue in real valuation work and a useful way for interviewers to assess judgment, not just mechanics.