--%>

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 : Personal identities-Organization health

    Personal identities: Generally employees like to work as they interact with animals and success motivates them, they learn new things in their routine job and they are a member to team.  But some job requirements like conducting euthanasia impact

  • Q : Real gross profit ratio and standard

    Is real gross profit ratio is bigger than standard gross profit ratio?

  • Q : Creatives and Suites What happens when

    What happens when creativity based on individual exceptionalism has evolved as part of the orthodoxy of Western managerial practice is applied within a creative business organisation in the business of “symbolic production&rdquo

  • Q : Appropriated retained earnings The

    The portion of retained earning that is not available for dividends. To appropriate retained earnings, the company must record the partitioning of retained earnings. The company can use appropriated retained earnings for contingencies or big projects. Appropriating retained earning does not invol

  • Q : Direct loans-loan guarantees and credit

    Do you think that government of the country must assist the private business in conduction of the international trade through the direct loans, loan guarantees, and/or credit insurance?

  • Q : Creativity and the Individual What are

    What are the various aspects of Creativity on an individual in the creative industry ?    

  • Q : Responsibility Accounting Explain the

    Explain the term Responsibility Accounting and types of responsibility centres with example?

  • Q : Motivations for counterparty to enter

    Specify the basic motivations for the counterparty to enter into the currency swap.

  • Q : Define the term Accounts Payable

    Accounts Payable: It is an accounting entry which symbolizes an entity's obligation to pay off a short-term debt to its creditors. Accounts payable entry is found on balance sheet beneath the heading current liabilities. Accounts payable are frequentl

  • Q : Great Society programs What are the

    What are the goals of “Great Society” programs?