User Account

All Pages

Why the cost of equity is the appropriate discount rate

Assignment Help Accounting Basics
Reference no: EM132730640

Problem 1: Under the residual income approach and the discounted cash flow approach to firm valuation, earnings and cash flows, respectively, are discounted using a firm's cost of equity. Discuss why the cost of equity is the appropriate discount rate to use to discount a firm's earnings and cash flows. Why is the cost of debt inappropriate to use to discount a firm's earnings or cash flows?

Reference no: EM132730640

Questions Cloud

Prepare the revenues without donor restrictions section : Prepare the revenues, gains, and other support without donor restrictions section of Evanston General Hospital's statement of operations
How social work administrator personal leadership philosophy : Post (2 to 3 pages) how a social work administrator's personal leadership philosophy and style may influence a human services organization's culture.
Compute the balance of work in process at the end of year : Manufacturing overhead was applied to production at a rate of 80% of direct labor costs. Compute the balance of work in process at the end of year
Review the harvard business school reprint-leading teams : Create a plan describing the steps necessary to create more successful teams at various levels within your organization. Include the following in the plan:
Why the cost of equity is the appropriate discount rate : Why the cost of equity is the appropriate discount rate to use to discount a firm's earnings and cash flows. Why is the cost of debt inappropriate to use
Underlisted 9 mission statement components : Analyze the mission statement of the following organizations using the underlisted 9 mission statement components.
Explain about statement of financial position : Explain about Statement of Financial Position and describe any information may be useful to investors in the entity (both lenders and shareholders).
Team member input strategies : Outline the strategies you will use to ensure team members have an input into the planning, decision-making and operational aspects of their work.
Identify at least three weaknesses in the controls : When stock falls below 100 the computer automatically produces, Identify at least 3 weaknesses in the controls and suggest possible improvements.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd