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 : Goals of Social Democrats What were the

    What were the goals of Social Democrats? What did Anarchists want?

  • Q : Restrictions of foreign equity ownership

    Describe various restrictions of foreign equity ownership.  Why countries impose these restrictions, explain your view on this?

  • Q : Time draft Explain how does time draft

    Explain how does time draft become a banker’s acceptance?

  • Q : Trends in international business

    Explain three important trends which have prevailed in the international business during last two decades.

  • Q : Article on maintenance policy for plant

    Write an article on the maintenance policy for overall costs and enhancing plant productivity.

  • Q : Leadership qualities required for

    Question Can one person in an organization make a difference? Write an essay on the leadership qualities required for running modern organizations <

  • Q : Payment method-Buy pound or investing

    When you have visited the London, you have purchased a Jaguar for £35,000, which is payable within the three months. Enough cash is there at your bank in the New York City that pays 0.35% of interest per month, compounding monthly, to pay for car. Presently, spo

  • Q : Wind turbine I have started to design a

    I have started to design a wind turbine but I am stuck now. I would like you to have a look to my design and tell me what do I have to do.

  • Q : Computing cross-rate matrix Compute

    Compute cross-rate matrix for French franc, Japanese yen, German mark, and the British pound. Utilize most recent European term quotes in order to compute the cross-rates in order that the triangular matrix result is same as that of the portion above diagonal in Exhib

  • Q : Case study of an economic and labour

    The woman in the dark suit (serious women always wear black suits) leafed through the papers on her desk. She was a fund manager and she was nearing the deadline for an investment decision by one of her leading clients, who wanted to invest in sovereign bonds in a dev

©TutorsGlobe All rights reserved 2022-2023.