Define discounting the cash flows in the apv model, Financial Management

Assignment Help:

What is the intuition of discounting the several cash flows in the APV model at fixed discount rates?

The APV model is a value-additivity method where total value is defined by the sum of the present values of the individual cash outflows and inflows. Every cash flow will not necessarily have similar amount of risk associated with it. To account for risk variations in the analysis, every cash flow is discounted at a rate commensurate along with the inherent riskiness of the cash flow.

Related Discussions:- Define discounting the cash flows in the apv model

Bond, Bond - One type of long-term PROMISSORY NOTE, often issued to the pub...

Bond - One type of long-term PROMISSORY NOTE, often issued to the public as a SECURITY regulated under federal securities laws or state BLUE SKY LAWS. Bonds can eitherbe registered

Illustrate earning yield method, Q. Illustrate Earning Yield Method? Ea...

Q. Illustrate Earning Yield Method? Earning Yield Method: - As per this method, cost of equity capital is calculated by establishing a relationship between earning per share an

Determine the circumstances is a warrant’s value high, Under what circumsta...

Under what circumstances is a warrant’s value high? Explain. A warrant’s value would be high while the stock prices, time to expiration, and/or expected stock price volatility a

Define factors for investing in the emerging stock market, As an investor, ...

As an investor, what factors would you consider before investing in the emerging stock market of a developing country? Answer: An investor in emerging market stocks requirements

Distinguish between lease and hire purchase, Distinguish between Lease and ...

Distinguish between Lease and Hire Purchase. What are the circumstances in which each of the system of financing is better than other?

Shareholder value, SHAREHOLDER VALUE There are various measures used by...

SHAREHOLDER VALUE There are various measures used by market analysts and financial experts to derive the maximum Shareholder Value of a particular company but we would take the

Aim of finance function, AIM OF FINANCE FUNCTION The fundamental aims ...

AIM OF FINANCE FUNCTION The fundamental aims of a modern finance function are: Acquiring enough funds when required at lower cost. Proper use of funds in projects w

Bond with call and prepay options, Let us consider a bond with ...

Let us consider a bond with callable or prepayable feature. Figure shows the price/yield relationship of option-free bond and callable bond. The price yield

Performance evaluation, Performance evaluation One can determine this b...

Performance evaluation One can determine this by comparing the cash flow from assets and cost of capital. 1. Cash flow from assets Cash flow from assets is calculated

Lease finance, lease finance and its types

lease finance and its types

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages