Their last two acquisitions, an anti-inflammatory drug, BruPain, and an anti-allergy medication, Immunol, were made using a discount rate assumption of 14%. Ron was highly skeptical because he felt that with their 20-year bonds selling to yield 12.69% at that time, 14% would be too low to cover the 6% risk premium that analysts had typically required on the firm’s equity. “We’ll get by with debt financing on these 2 acquisitions,” was John’s way of justifying the decision, paying little heed to Ron’s concerns “We have to get some more products in our portfolio,” he remarked.