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What discount rate is used in the net present value of the refunding decision

HomeHemsley41127What discount rate is used in the net present value of the refunding decision
02.11.2020

If Charlie then calculates the present value of his $40,000 year for 22 years at a 7% discount rate, he’ll find that the net present value is “only” about $451,000. In other words, it would only take $451,000 to provide $40,000/year for 22 years at a 7% rate of return. here DPV means “discounted present value”, and FV means “future value”, and r is your discount rate (which in this case is 10% or 0.1). The $10 is future value, and you want to know the discounted present value of that ten dollars, so you divide the FV by (1 + 0.1) to get the DPV of that money. Discount Rate: The discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. The rate used to discount future cash flows to the present value is a key variable of this process. A firm's weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors. Adjusted Present Value - APV: The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits Thanks for A2A David Kemper. You have already covered everything! Let me take a second stab at it: Explanation 1: Discount rate is basically "Desired return" or it is the return that an (individual) investor would expect to receive on a simila

Internal Rate of Return (IRR) The Internal Rate of Return (IRR) is the discount rate that sets the net present value of an investment equal to zero. This guide to calculating IRR will give several examples and who why it's used in capital budgeting, private equity and other areas of finance and investing. If IRR is greater than cost of capital,

25 Jun 2019 WACC used as a discount rate is crucial in budgeting in order to free cash flow figure, this can be discounted to determine net present value. Question: What Discount Rate Is Used In The Net Present Value Of The Refunding Decision? (Points : 5)       The Before Tax Cost Of The New Debt       The After-tax Cost Of New Debt       The Weighted Average Cost Of Capital       The After-tax Cost Of Total Firm Capital In the net present value of the refunding decision, what discount rate is used? A. the aftertax cost of capital B. the aftertax cost of new debt C. the aftertax cost of the old debt D. the before tax cost of the new debt 24. A bond's rating can depend on all of the following except A. the corporation's debt-equity ratio. (Bond valuation) A $1,000 face value bond has a remaining maturity. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond's coupon rate is 7.4%. Changes in the discount rate used to complete net present value analysis can have a significant impact on the estimated value of the investment and therefore affect the overall investment decision. As the required internal rate of return (IRR) increases, the net present value will: A. decline B. increase C. remain the same D. become zero If Charlie then calculates the present value of his $40,000 year for 22 years at a 7% discount rate, he’ll find that the net present value is “only” about $451,000. In other words, it would only take $451,000 to provide $40,000/year for 22 years at a 7% rate of return. As shown in the analysis above, the net present value for the given cash flows at a discount rate of 10% is equal to $0. This means that with an initial investment of exactly $1,000,000, this series of cash flows will yield exactly 10%. As the required discount rates moves higher than 10%,

As shown in the analysis above, the net present value for the given cash flows at a discount rate of 10% is equal to $0. This means that with an initial investment of exactly $1,000,000, this series of cash flows will yield exactly 10%. As the required discount rates moves higher than 10%,

here DPV means “discounted present value”, and FV means “future value”, and r is your discount rate (which in this case is 10% or 0.1). The $10 is future value, and you want to know the discounted present value of that ten dollars, so you divide the FV by (1 + 0.1) to get the DPV of that money. Discount Rate: The discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. The rate used to discount future cash flows to the present value is a key variable of this process. A firm's weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors. Adjusted Present Value - APV: The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits

18 Jun 2010 1) What discount rate is used in the net present value of the refunding decision? 2) With regard to interest rates and - Answered by a verified 

(Bond valuation) A $1,000 face value bond has a remaining maturity. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond's coupon rate is 7.4%. Changes in the discount rate used to complete net present value analysis can have a significant impact on the estimated value of the investment and therefore affect the overall investment decision. As the required internal rate of return (IRR) increases, the net present value will: A. decline B. increase C. remain the same D. become zero If Charlie then calculates the present value of his $40,000 year for 22 years at a 7% discount rate, he’ll find that the net present value is “only” about $451,000. In other words, it would only take $451,000 to provide $40,000/year for 22 years at a 7% rate of return. As shown in the analysis above, the net present value for the given cash flows at a discount rate of 10% is equal to $0. This means that with an initial investment of exactly $1,000,000, this series of cash flows will yield exactly 10%. As the required discount rates moves higher than 10%, The minimum required rate of return (20% in our example) is used to discount the cash inflow to its present value and is, therefore, also known as discount rate. Investments in assets are usually made with the intention to generate revenue or reduce costs in future.

Adjusted Present Value - APV: The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits

here DPV means “discounted present value”, and FV means “future value”, and r is your discount rate (which in this case is 10% or 0.1). The $10 is future value, and you want to know the discounted present value of that ten dollars, so you divide the FV by (1 + 0.1) to get the DPV of that money. Discount Rate: The discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. The rate used to discount future cash flows to the present value is a key variable of this process. A firm's weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors. Adjusted Present Value - APV: The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits Thanks for A2A David Kemper. You have already covered everything! Let me take a second stab at it: Explanation 1: Discount rate is basically "Desired return" or it is the return that an (individual) investor would expect to receive on a simila