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Risk Adjusted Discounting Rate - Methods of Computing Cost of Capital
This method is used to establish the discounting rate to be used for a provided project. The cost of capital of the firm will be utilized as the discounting rate for a given project whether project risk is equal to business risk of the firm. If a project has a higher risk than the business risk of the firm, then a percentage risk premium is further added to the cost of capital to verifying the discounting rate that is discounting rate for a high risk project = cost of capital + percentage risk premium. Consequently a high risk project such will be evaluated at a higher discounting rate.
List and explain the three financial factors that influence the value of a business. Ans: The three issues that influence the value of a firm's stock price are cash flow , ti
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Looking at the income statement, balance sheet and cash flow statement of the company and relating it with the non financial factors, I have the important observations as below:-
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Interpolation method Consequently, r denotes required rate of return Consequently, r = 14 percent + (15 percent - 14 percent) x 253 .646 /253 .646 + 5.375
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Identify one each (1) benefit, (2) disbenefit, and (3) monetary cost that would impact each of the following projects: a.A new electrical distribution station in a developing pa
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