Pacific Gold Corp fka PCFG

[chart guy]

Determining the right discount rate to use is the most elusive aspect of financial analysis but I will school you none-the-less.

Start like this. If you do not buy PCFG, you could buy long-term treasuries instead which would yield you 2.5%

So buying PCFG must yield you at least 2.5% to be motivated to buy it no?

Now we must account for the risk of PCFG ownership which can be approximated by applying a multiple reflecting the volatility of PCFG as compared to the general market. This is all part of the CAPM - capital asset pricing model. (look it up)

If historically the risk of the market has been shown to be about 6%, and we know that PCFG is probably 5 times more volatile than the S&P500 (you must actually calculate the beta of PCFG to determine this, I have just estimated here quickly), then the appropriate discount rate to apply to PCFG should be (5 x 6.5%) or about 33%. Then we must add in the risk free rate of 2.5% and there you have an appropriate discount rate to use for PCFG cash flows of about 35%