Good discount rate for npv
[DOC File]Chapter 5 Project Appraisal and Risk - Yola
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(2) The expected net present value is the value expected to occur if an investment project with several possible outcomes is undertaken once (3) The discounted payback period is the time taken for the cumulative net present value to change from negative to positive. A 1 and 2 only. B 1 and 3 only. C 2 and 3 only. D 1, 2 and 3
[DOC File]Time Value of Money
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If the appropriate discount rate is 10%, what is NPV? When the appropriate discount rate is 10%, an offer to loan you money . for 10 years at 3% is truly an amazing deal... In financial markets, you are facing a nearly perfect, competitive market . If selling a security has a positive NPV to you, it probably has a negative NPV to the. purchaser.
[DOC File]Chapter 23: Capital Investment
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NPV $ 112,000. Using a discount rate of 20%: Year Cash Flow Discount Factor Present Value. 0 $(340,000) 1.000 $(340,000) 1–10 80,000 4.192 335,360. NPV $ (4,640) If the 20 percent discount rate is used, the company would not acquire the robotic system. Using an excessive discount rate could seriously impair the ability of the firm to stay ...
[DOC File]ECON366 - KONSTANTINOS KANELLOPOULOS
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Then the downside NPV, assuming a 25% discount rate, would be zero, not - $14.9 million. The payoff to waiting would be: Expected NPV, invest in year 1 = .25 ( 14.8 + .50 ( (-0.1) + .25 ( 0 = + $3.65 million At a 15% discount rate, the expected NPV from investing in year 1 would be +$18.6 million.
[DOC File]Moral Sentiments and the Discount Rate for Benefit-Cost ...
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PV of Net Gain or Loss Users -$100 Altruists -$25 Others $110 KH NPV $10 KHM NPV -$15 *uses a discount rate of 3%. There are good reasons to include existence values, and moral values generally, in BCA. First, existence values can be quite large (see Cross, Hite, Vuotto, Johansson).
[DOC File]Chapter 11 - Capital Budgeting and Economics
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A bias towards overestimating expected cash flows (or underestimating the discount rate) can make a bad project look good. (Negative NPV project accepted.) This problem is compounded if a manager has an incentive to overestimate cash flows (or underestimate the discount rate).
[DOC File]UPX Material - University of Phoenix
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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 that is …
[DOC File]Chapter 12
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good capital budgeting decisions – neither the NPV rule nor the IRR rule can be implemented without knowledge of the appropriate discount rate financing decisions – the optimal/target capital structure minimizes the cost of capital
[DOCX File]Cost benefit analysis guidance note
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Where there is a research-related reason for using a different discount rate, the analysis can be presented at that discount rate in addition to the 3, 7 and 10 per cent scenarios described above. Harrison (2010), among others, provides a more detailed discussion of the issues surrounding the choice of discount rate.
[DOCX File]Seattle Pacific University
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The most popular alternative to NPV is the internal rate of return (IRR), discussed earlier. IRR is that percentage discount rate that equates cash outflows with cash inflows. IRR will always be greater than the discount rate if NPV is positive and smaller if NPV is negative. IRR will equal the discount rate when NPV …
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