Question

Explain what discount rates are used for and how you might interpret them

Explain what discount rates are used for and how you might interpret them

Homework Answers

Answer #1

Answer - The discount rate is used for converting the present value of the cash flows into the future value of cashflows or the expenses and vice a versa.

The present value of is greater than the value of money in the future. In other words , the value of money declines in future with time. This may be due to the rates of inflation in the economy. Hence to adjust the cashflows or the expenses as per the rates of inflation and time , discount rates are used . This is the most important elements of time value of money

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Please give a 1-2 sentence description (where might you find them/how common are they/what disease might...
Please give a 1-2 sentence description (where might you find them/how common are they/what disease might they cause/etc.) of the following bacteria: S. anginosus, and Enterobacteriacae.
Explain how hisoanics have higher rates of obesity and teach them how they can reduce obesity.?
Explain how hisoanics have higher rates of obesity and teach them how they can reduce obesity.?
1.Multiple discount rates for a bond and show how the spot rates are determined 2.What is...
1.Multiple discount rates for a bond and show how the spot rates are determined 2.What is money? 3.The results of the Fed buying treasury securities from the public on the financial balance sheets of the parties.
Explain how you might use language modeling and reinforcement as well as how you might encourage...
Explain how you might use language modeling and reinforcement as well as how you might encourage students to use language modeling in a classroom?
Explain how you produce iPS cells and what you would use them for?
Explain how you produce iPS cells and what you would use them for?
what is risk adjusted discount rate? how is it used?
what is risk adjusted discount rate? how is it used?
a. Explain how to interpret the numbers in this model. Predictive analytics is used to predict...
a. Explain how to interpret the numbers in this model. Predictive analytics is used to predict the future by reviewing historical data, looking at patterns and relationships of the data then applying the relationships. This allows the bank to predict the balances by applying the numbers in the formula. This problem has three variables. Those variables are age, years of education and household wealth. b. Suppose that a customer is 32 years old, is a college graduate, and has a...
If you are a saver, how might you handle decreasing interest rates? A regular savings account...
If you are a saver, how might you handle decreasing interest rates? A regular savings account may not yield the returns you desire. Are there other options available?
How would the discount rate used to evaluate a replacement or repair project, such as a...
How would the discount rate used to evaluate a replacement or repair project, such as a leaky roof, be different from the discount rate for an investment in a new product or service? Why would the discount rates differ?
2. How might managers interpret the potential for their product in a market that is, in...
2. How might managers interpret the potential for their product in a market that is, in absolute economic terms, large, but on a per-capita basis, characterized by a majority of poor consumers?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT