Risk-free rate

The return available with no default risk, used as the base of every required return. In practice it is the yield on a long-dated government bond in the currency of the cash flows.

For a rupee valuation that means the ten-year Indian government security; for a dollar valuation, the ten-year Treasury. The two differ by several percentage points, and most of that gap is expected inflation rather than risk.

The rule that prevents the common error is currency consistency. A rupee cash flow discounted at a dollar risk-free rate will look far too valuable, and the mistake survives because both numbers look reasonable in isolation.

Match the currency of the rate to the currency of the cash flow.