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Q. Explain Risk Adjusted Discount Rate Method?
In the risk adjusted discount rate method the future cash flow from capital projects are discount at the hazard adjusted discount rate and decision regarding the selection of a project is made on the basis of the net present worth of the project computed at the risk adjusted discount rate. The risk attuned discount rate is based on the assumption that investors expect a higher rate of return on more perilous projects and a lower rate of return on less risky projects and so a higher discount rate is utilized for discounting the cash flows of more risky project and a lower discount rate is used for discounting the cash flows of less risky project.
What is an annuity? An annuity is a series of equivalent cash flows, spaced consistently over time.
What is the most conservative type of working capital financing plan a company could implement? Explain. An all equity capital structure would be mainly conservative type of wor
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Define the term- Profitability maximisation Profitability maximisation would imply that a firm must be guided in financial decision making by one test; select projects, assets
Coverage ratios give the relationship between the financial charges of a firm and its ability to service them. The four most commonly used coverage ratios are:
Q. What is Investment Decision ? Investment Decision: - Investment decision as well known as 'Capital Budgeting' is related to the selection of long-term assets or projects in
1. In this query the implied volatilities are calculated by using a risk free interest rate of 2%. The computation are summarized by the following figure. 2. The computatio
Explain the difference between performing the capital budgeting analysis from the parent firm’s perspective as opposed to the project perspective. The aim of the financial mana
Ashok is to receive an amount of Rs. 15,00,000 from his relative after 3 years. He wants to buy a house for which he wants the money to be paid now. His relative had al
Profitability Ratios Profit Margin It is a measure of the profit margin of the company. This is important to gauge the financial position of the company.
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