Disagreement with group mate over which risk-free rate to apply

Alright so we're doing a valuation case for a local company (M&A), and the company's financial statements are all in USD, while the company is incorporated and listed in Singapore, and has operations in Asia, Europe, North America, Australia, and NZ.

We both agree that we should use the US risk-free rate, but disagree on the reason why. I think it should be used to account for the impact of US inflation (which is accounted for in the risk-free rate) on their cash flows, which are reported in USD. He says that it should be used because most of the B/S debt is in USD, and the risk-free rate should be in the currency they are borrowing in.

Can you guys tell me what is the correct reason?

 

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