Discount rate calculation

    • [DOC File]CHAPTER 3

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      The internal rate of return is the discount rate that equates the net investment of a project with the present value of its net cash flows. T 19. When the company has a capital rationing constraint, some profitable projects could be rejected. T 20. If a project's internal rate of return equals the cost of capital, the project has a zero net ...


    • [DOC File]Chapter 12

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      A) internal rate of return. B) discount rate used in the NPV calculation. C) firm’s simple rate of return. D) firm’s average ROI. Source: CMA, adapted. Level: Medium LO: 1 Ans: B. 13. If taxes are ignored, all of the following items are included in a discounted cash flow analysis except: A) future operating cash savings. B) depreciation ...


    • [DOC File]COST SHEET - FORMAT

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      Feb 02, 2008 · 2) Converting nominal discounting rate into real terms . Real discount rate = 1 + Nominal discount rate - 1 . 1 + inflation rate . With this real discount rate the Cash Inflows are discounted to find NPV. 3) Pay back reciprocal = Average annual cash inflows (It is used for reasonable approximation of


    • [DOC File]Multiple Choice Questions

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      Discount rate A Yes After tax cost of the loan if they borrow and buy B Yes AB Co’s WACC C No After tax cost of the loan if they borrow and buy D No AB Co’s WACC Question 7 – Purchase or Lease the New Machine AGD Co is a profitable company which is considering the purchase of a machine costing £320,000. If purchased, AGD Co would incur ...


    • [DOC File]Ratio and Accounts Analysis

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      13. What would be a company’s “times interest earned ratio” if interest paid on loans amount to P9,000 and its net income after income tax is P99,000. (Assume a 25% income tax rate on first P100,000 of income and 35% income tax rate on income in excess of P100,000.) a. …


    • [DOC File]Chapter 7: Net Present Value and Capital Budgeting

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      1+ Real Discount Rate = (1+ Nominal Discount Rate) / (1+ Inflation Rate) Real Discount Rate = [(1.14) / (1.05)] – 1 = 0.0857 . Find the equivalent annual cost (EAC) of each of the copiers. The firm will choose the model with the lower equivalent annual cost. XX40. Find the present value of both the initial cash outlay and the maintenance ...


    • [DOC File]Multiple Choice Questions

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      The supplier has offered either a discount of 0.5% for payment in full within 30 days, or a discount of 3.6% on orders of 30,000 or more components. If the bulk purchase discount is taken, the cost of holding components in inventory would increase to $2.20 per component per year due to …


    • [DOC File]Examen de la Política Comercial (TPR) de las Comunidades ...

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      The document states that "Beer (imported and domestic) is subject to federal excise tax at a rate of US$18 per barrel of 31 gallons. A reduced rate of US$7 is applied on the first 60,000 barrels of beer produced in a year by a domestic brewer with an annual production of two million barrels of beer or less.


    • [DOC File]Objective Questions and Answers of Financial Management

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      5. In Risk-Adjusted Discount Rate method, the normal rate of discount is: (a) Increased, (b) Decreased,(c) Unchanged,(d) None of the above. 6. In Risk-Adjusted Discount Rate method, which one is adjusted? (a) Cash flows,(b) Life of the proposal,(c) Rate of discount,(d) Salvage value. 7. NPV of a proposal, as calculated by RADR real CE Approach ...


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