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[DOC File]Finance 660 - University of Kentucky
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For any discount rate from zero percent to 20 percent, project B has an . NPV twice as great as that of project A. Explain your answer. The Profitability Index. Suppose the following two independent investment opportunities are available to Greenplain, Inc. The appropriate discount rate is 10 percent. Year Project Alpha Project Beta 0 -$500 ...
find discount rate for npv

[DOC File]CHAPTER 1
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Why is the net present value of a capital budgeting project equal to zero when its internal rate of return is used as the discount rate? Calculating an NPV involves obtaining the present values of future cash flows. These future flows are greater than the project's initial outflowthe IRR describes this difference.
determining discount rate for npv

[DOC File]UPX Material - University of Phoenix
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The discount rate used in an NPV calculation is the opportunity cost of capital. Therefore, it is true that the NPV rule does assume that cash flows are reinvested at the opportunity cost of capital. [Note: In the first printing of the eight edition, Challenge Question 2 refers to Practice Question 3.
appropriate discount rate for npv

[DOC File]Chapter 7: Net Present Value and Capital Budgeting
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Stake Holders PV of Net Gain or Loss Users $100 Altruists $25 Others -$110 KH NPV -$10 KHM NPV +$15 * uses a discount rate of 3%. Using traditional KH, the net present value (NPV) is negative when the moral sentiments of the altruists are ignored. When moral sentiments are considered using KHM, the NPV is positive. Thus KH misses values.
typical discount rate for npv

[DOC File]Moral Sentiments and the Discount Rate for Benefit-Cost ...
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To calculate the NPV, discount the expected t = 1 cash flow at the opportunity cost of capital for each of the projects. NPVA = -$100 + $120 / (1 + opportunity cost of capital for project A) NPVB = -$100 + $93.2 / (1 + opportunity cost of capital for project B)
determining discount rate

How To Calculate NPV (With Formula and Examples) | Indeed.com
Project A’s cash flows are presented in real terms. Therefore, one must compute the real discount rate before calculating the NPV of Project A. Since the cash flows of Project B are given in nominal terms, discount its cash flows by the nominal rate in order to calculate its NPV. Nominal Discount Rate = 0.15. Inflation Rate = 0.04
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[DOC File]Chapter 11
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Lecture Tip, page 507: The warehouse problem employs the WACC as the discount rate in a NPV calculation. This is only appropriate if the warehouse has approximately the same risk characteristics as the overall firm. A second assumption that is often discussed in financial literature is that the project should be financed in the same proportion ...
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[DOC File]PPP Projects: Discount Rate
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If your NPV is above $0, your IRR will be above 10%. If your NPV is below $0, your IRR will be below 10%. You can prove this by taking ABC’s IRR of 35.58% and using it as the discount rate in the NPV formula. Recalculate NPV using the 35.58% discount rate and you will get an NPV …
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Discount rate in npv calculation