Discount rate

monetary policy of a country is the process by which the central monetary authority, controls the supply of money in the economy. Through open market operations, the central bank is able to affect the level of money market interest rates. The term structure of interest rates play an important role in determining the effectiveness of monetary policy. The objective of the present paper is to analyse the impact and…

currency is one major flaw with physical money that has required many technological advances to catch these counterfeit bills. Digital Currency could also be a good invest since it works like the stock market and other regular currencies with fluctuating rates and value. For example, one Bitcoin is equal to $752.77…

decision using approaches such as the net present value (NPV) and the internal rate of return (IRR) calculations. According to provided data, Home Depot made an initial investment outlay of $65 million. Additionally, the investment decision would depend on the company’s cash flows. For instance, the NPV “assumes cash flows are reinvested at the cost of capital,” while the IRR “assumes cash flows are reinvested at the internal rate of return” (Peterson & Fabozzi, 2002, p. 89). Implications of the…

traffic congestion. The funding is constraint by $5 Million. Managers of Dalco Inc. have to make a capital budgeting decision to select the best decision making tool to base their selection. For the previous two years Net Present Value (NPV) and Internal Rate of Return (IRR) were the primary decision making tools on which capital budgeting decisions were based upon. The results did not prove to capture the actual results with accuracy and provide support to capital budgeting decisions. The…

at the age of 65. I believe I will be alive for 32 years in my retirement. Step 2: With the way things are looking I estimate that I will need $44,000 a year in retirement income. I plan on investing in retirement so I am going to use a 7% interest rate. Step 3: I am not going to include Social Security in my analysis because by the time I will retire I do not believe that Social Security will still exist. Therefore, my answer for Step 3 is 0. Step 4: The job I currently have does not offer a…

from $800 to $950, the yield to maturity rate drops by 19.7% (from 25% to 5.3%). Similarly, when the bond price increases and becomes equal to face value ($1000) giving the yield rate to be 0%, it normally happens…

Asset pricing theories help us to find out risks of assets and provide us with a framework to associate risks of assets with their expected returns. A large number of theories and models have been prevailed to relate the risk and return of various assets to aid practitioners in selecting investment portfolio. These theories include Arbitrage Pricing Theory (APT) and the Capital Assets Pricing Model (CAPM). The Arbitrage Pricing Theory is a theory developed by Stephen Ross (1976) and was later…

major costs of the firm to develop. The terminal value is calculated at the time of liquidation and ceases the business that provides the fair value to firm at fix time period of 5 to 10 years. It was assumed that the expected rate of return was exceeding than required rate and company has enjoyed the benefit of growth. The net present value measures the positive performance of firm that they had decided to go ahead with bearing unsystematic and specific risk. VC methodology is the popular…

inaccuracy. 3.3 Internal rate of return (IRR) IRR (Internal Rate of Return) is the rate needed to match the value of an investment (present value) with their respective future returns on cash balances. The IRR calculation which was stated in this report (See Appendix) shows that the Project D is 21,58% while Project E is 15,05% it means that the Project D has a higher return than Project The disadvantage of using this appraisal model is not consider the changes in discount rates as well as…

to add a 3% risk premium. The corporate tax rate for Gordon is 30%. •…