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
diagrammatically condition of consumer equilibirium

How has the haberler''s theory of opportunity cost an improvement over the classical theory of trade

The act of production involves the transformation of inputs into output. Production is a transformation of physical inputs into physical inputs into physical output. The output is

use a graphical illustration to briefly describe what the influence of an increase in immigrants would be on the market supply of labour

1. Cost minimizing firms must be profit maximizing as well. False, why??

Advocacy of Globalisation: In support of the movement for globalisation, the following arguments are put forth: i) Globalisation promotes foreign direct investment and, thu

#question. what is the underlying reason for the law of increasing opportunity cost?

When you drop by the only coffee shop in your neighbourhood, you notice that the price of a cup of coffee has enhanced  considerably since last week.  You decide it's not a big dea

Over the course of modern American economic history there have been market failures, various social problems, and other complexities that have resulted in certain resource markets

What is the graph of the production possibilities frontiers for the American and Japanese economies if American worker can produce 10 tons of grain a year and Japanese worker can p