--%>

Cash flows in APV model

State the intuition of discounting several cash flows in APV model at particular discount rates?

E

Expert

Verified

APV model is a value-additive system where total value is computed through the sum of present values of the individual cash inflows and outflows.  Each cash flow will not essentially have same amount of risk linked with it.  To account for the risk differences in analysis, every cash flow is discounted at the rate commensurate with the inherent riskiness of cash flow.

   Related Questions in Financial Accounting

  • Q : Case study of a global economy The

    The economic recovery is seemingly on track and in fact strengthened during the first half of 2010. The global financial market however, suffered a setback with the turmoil in sovereign debt markets leading to sharp currency movements. The extent of recovery varies ac

  • Q : Define Conspicuous Consumption

    Conspicuous Consumption: It is the phenomena of spending money on services and goods which are not required but keeping them gives you a high social status. Those things are kept mainly for the purpose of displaying and creating a false image of your

  • Q : Ihi Which of the following adjustments

    Which of the following adjustments is an example of an accrual adjustment? an asset/expense adjustment involving depreciation an asset/expense adjustment involving insurance a liability/expense adjustment involving utility expenses a liability/revenue adjustment involving unearned revenues

  • Q : Difference among personal or real

    What is the difference among personal or real account and nominal account?

  • Q : Accounting Treatment of Goods What are

    What are the various Accounting Treatment of Goods?

  • Q : Link financial accounting and

    is there a link between financial accounting and programmed decision

  • Q : Asset Owned by an entity, something

      Owned by an entity, something that provides benefits and whose cost can be measured. The measure of the value of assets in dollar appears on the

  • Q : Hedging transaction exposure and money

    Compare and discuss the hedging transaction exposure by using the forward contract vs. money market instruments. When the optional hedging approaches do creates the same result?

  • Q : What are Personal accounts What are

    What are Personal accounts. Describe their types?

  • Q : What is Assets in Accounting Assets are

    Assets are those resources that the business owns. Assets are the things of value owned which enable the firm to get cash or befit in future. There are mainly two types of assets: - Current assets & Fixed assets for e.g. cash, f