discounting principle, Microeconomics

The owner of a firm Mr. Rajneesh expects to make a profit of Rs.5,50,000, Rs.6,50,000, Rs.7,50,000 and Rs.8,50,000 at the end of the 1st, 2nd, 3rd and 4th year respectively. Rajneesh believes that he will be in a position to sell the firm for Rs.32,00,000 at the end of the 4th year. Taking into consideration the likely risk and uncertainty factors, Rajneesh strongly feels that the appropriate discount rate is 15%. Calculate the value of the firm.
(The PV of Re.1 @15% at the end of the 1st, 2nd, 3rd and 4th year are:0.8696, 0.7561, 0.6575 and 0.5718 respectively).
Posted Date: 5/11/2012 7:21:28 AM | Location : United States







Related Discussions:- discounting principle, Assignment Help, Ask Question on discounting principle, Get Answer, Expert's Help, discounting principle Discussions

Write discussion on discounting principle
Your posts are moderated
Related Questions
please can you explainn what "down 0.1 percentage point on the quarter means"?

Monopsony is single buyer of a commodity in the market.  The MRP slopes downward in an imperfectly competitive (resource) market serving an not perfectly competitive product mar

Question Suppose you work for the state government of California. Due to the heavy traffic jam on I-880, the state has decided to decide to construct a new highway. To fund a p

Total cost curve (TC) is obtained by adding up vertically total fixed cost and total variable cost curves because the total cost is sum of total fixed cost and total variable cost

The Market for Pool Rafts The market for pool rafts in Playa del Largarto is competitive and includes no transaction costs.  Five suppliers are willing to sell pool rafts in P

Identify the four essential economic activities. The four main economic activities are: a)  resource maintenance, b)  production, c)  distribution, and d) consumpti

Consumer Choice   * Decision making & Public Policy - Selecting from a non matching and matching grant to fund police expenditures


Slutsky's Theorem: Graphical Presentation  We prove here that own price effect is the sum of own substitution effect and income effect for a price change, which is known

Impact of Economic Reforms on Labour: It would be of interest to study the industrial relations scenario in the pre-reform and post-reform period. Data provided in table 8.4 r