Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
After estimating the cash flows, the next step is to determine the appropriate interest rate that should be used to discount the cash flows. The minimum return required by an investor should be equal to the risk free rate of return plus risk premium. In India , we can take yield on a 90-day Treasury bill as a risk-free rate. Any investor who invests in 90 days Treasury bill, will receive a return equal to risk-free rate. But the investors who invest in corporate bonds seek some extra return over risk free rate for the additional risk are taking. This additional return is known as the risk premium.
So, appropriate rate is,
Appropriate Rate = Risk Free Return + Risk Premium.
Mostly people use one interest rate of all estimated cash flows. However, since each cash flow is unique so it is better to use a unique interest rate for each cash flow.
Government paper with tenor more than one year is known as dated security.
Q. Market condition Affecting cost of capital? Market condition: if an investor is purchasing a security where the risk of the investment in significant the opportunity for add
Demerits of Pay Back Method:- (i) It ignores the Cash Flows after the Pay Back Period: - The main shortcoming of this method is that it completely ignores all cash inflows subs
Q. Illustrate Earning Yield Method? Earning Yield Method: - As per this method, cost of equity capital is calculated by establishing a relationship between earning per share an
Q. What is Dependent Care Expenses? Dependent Care Expenses - Qualified child care expenses would allow a taxpayer this computed credit against tax. Amounts can be found on the
Q. Illustrate Compound Value Concept? The Compound Value Concept is used to find out the FV of present money. It is the same as the concept of compound interest, wherein the in
stauffer , inc., has estimated sale and purchase requirments for the last half of coming year. parepare cash budget for the month of
How do financial managers calculate the average tax rate? Financial managers calculate the average tax rate by dividing tax dollars paid by earnings before taxes (EBT).
Determine Net present value according to Ezra Solomon " The gross present worth of a course of action is equal to the capitalised value of the flow of future expected benefit,
What is a marginal cost of capital schedule (MCC)? Is the schedule all the time a horizontal line? Explain. The MCC schedule is a graphic depiction of the weighted average cost
A vailable bid capacity We saw the criterion that qualifies the bidder. Now we will learn about the bid capacity. There are chances that a bidder might acquire more contrac
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd