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

Working capital as a percentage of total assets, Q. Working Capital as a Pe...

Q. Working Capital as a Percentage of Total Assets? This approach of estimation of working capital requirement is based on the fact that the total assets of the firm arc consis

Monte carlo simulation model, Monte Carlo Simulation Model Monte Carlo...

Monte Carlo Simulation Model Monte Carlo simulation is used to analyse to what extent the valuation of the chosen company is dependent on the assumptions. Monte Carlo simulati

Generation of capital projects in the public sector, Question: (a) In t...

Question: (a) In the Strategic Planning Model, describe the various stages involved in the generation of capital projects in the public sector. (b) Outline the life cycle-co

Commercial mortgage-backed securities (cmbs), These securities are ...

These securities are backed by income-producing real estate, usually in the form of warehouses, shopping centers, apartments, office buildings, senior housi

What are retained earnings, What are retained earnings?  Why are they impor...

What are retained earnings?  Why are they important? Retained earnings denote the sum of all the earnings obtainable to common stockholders of a business throughout its whole h

Help with 4 questions, I need assistance with 4 questions. How do I know s...

I need assistance with 4 questions. How do I know someone can help me and have some idea of what it would cost before submitting the information? Also, how fast is the turnaround

Define price ceiling make consumers better off, How can a price ceiling mak...

How can a price ceiling make consumers better off?  Under what conditions might it make them worse off? If the supply curve is completely inelastic a price ceiling will raise c

Define differences between foreign bonds and eurobonds, Describe the differ...

Describe the differences between foreign bonds and Eurobonds.  Also discuss why Eurobonds make up the lions share of the international bond market. Answer:  The two segments of t

Corrective action on variance analysis, Corrective Action: Once budget ...

Corrective Action: Once budget figures are compared with those actually achieved, and a variance analysis carried out, management can then take steps to correct any problems id

China emerged as second most significant recipient of fdi, How would you de...

How would you describe the fact that China emerged as the second most significant recipient of FDI after the United States in recent years? Answer: China attracted a large deal o

Write Your Message!

Captcha
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!

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