--%>
Assignment Help - homework help

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 : Creativity and the Individual What are

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

    		•
  • Q : Prepare the balance sheet At the end of

    At the end of March, 2006 the balances in the various accounts of TTTTT & Company are as follows: Rs. in million Accounts Balance Equity capital 120 Preference capital 30 Fixed assets (net) 217 Reserves and surplus 200 Cash

    		•
  • Q : Social issues & person statuses Think

    Think of person you will who often irritates you or whose behaviour greats on your nerves. First list that person statuses and role then analysed his or her possible role expectations, role performance, role conflict and role strai

    		•
  • Q : Account A structure for showing the

    A structure for showing the effect of market events on a particular asset, liability, equity, earnings, or expense. The effects are measured in terms of dollars. The account looks like as a collection point in the meanwhile the processing of all the transactions involving the balance sheet or inc

    		•
  • Q : Prepare the journal entry to record the

    On December 31, 20x1, the Kat Co. purchase a group of four assets for a total cost of $1,000,000. An independent appraiser assesses the fair value of each asset asfollows: Asset Fair Value Land $350,000 Building 600,000 Equipment 200,000 Fixtures 150,000 Prepare the journal entry t

    		•
  • Q : Effects of foreigners portfolio

    Since early 1980s, foreign portfolio investors has purchased a considerable portion of the U.S. treasury bond issues.  Explain some short-term and long-term effects of the foreigners’ portfolio investment over the U.S. balance of payments.

    		•
  • Q : Calculation Of IRR Calculation Of IRR :

    Calculation Of IRR: IRR is the rate at which your discounted cash inflow becomes equal to your discounted cash outflow. In other words NPV=0. To determine this following steps are followed:- 1. Determine cash inflo

    		•
  • Q : Cash system and mercantile system what

    what is the difference between cash system of accounting and mercantile system of accounting

    		•
  • Q : Advantage of Historical Cost in

    What is the advantage of Historical Cost in Decision Making?

    		•
  • Q : Monetary/nonmonetary and temporal method

    Discuss dissimilarity in translation process between monetary/nonmonetary and temporal method.

    		•