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Why is it inappropriate to use one yield in discounting all cash flows in a financial asset?
Wiki User
∙ 13y ago
There are different cash flow patterns. Each cash flow should be discounted at a unique rate appropriate for the time period in which the cash flows will be received to get a more accurate bond price.
Wiki User
∙ 13y ago
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Is valuation of a financial asset based on concept of determining the present value of future cash flows?
How is the value of any asset whose value is based on expected future cash flows determined?
Explain the difference between compounding and discounting and how they value the cash flows of the organization?
Compounding means that you are adding money to the capital. Discounting means that some of the cost is being taken away.
Which financial statements do not include fixed asset accounts?
Statement of Cash Flows, Income Statement, Statement of Retained EarningsThose are three that I can think of off the top of my head
What is CSA based discounting?
It is the discounting of future cash flows based on rates of return earned on eligible collateral specified in the csa that is posted against otc derivative marks. Hope this helps.
The present value of the expected future cash flows of an asset represents the asset's?
intrinsic value
Do financial statements show the market value of an asset?
In general, financial statements show the book value of an asset, not the market value. The few instances where the financial statements will show market valuations are as follows: * When derivatives are carried for hedge purposes, they are periodically marked-to-market * When an investment appears to materially have lost value (when comparing to similar instruments in the market or, for illiquid markets, when operating cash flows from an investment go down markedly), conservatism requires the asset value to be moved to the "market" or lower price
Where is the receipt of a notes receivable reported on the statement of cash flows?
In the asset area
Cash flows more important than profits?
1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
Does a change in current assets increase or decrease cash flow?
It depends on the current asset, so the change of current asset might be increase or decrease cash flows.
What is the meaning of expected net present value?
It is the expected value of all cash flows of a project brought back to the present value, by discounting it by the cost of capital involved in the project.
What NPV discounting is?
Npv is the net present value of cash flows.The npv is a method of calculating whether a project is worth while based on its initial investment and the returns that will be received.Cash flows can be considered an amount of money which will flow into or out of the business. In the commercial world we can not just look at the values and assume that the same amount of money you invest in this project can for example be put into a bank and you will have a guaranteed amount of money from this. This is considered to be the time value of money, this is also the reason that we reduce the cash flows to the net present value to give a fair view of the cash flows. The % we can receive from the bank is considered to be the cost of capital e.g 7% So we then use this formulae to calculate the npv So the first cash outflow is not discounted as this is the beginning so technically no money could be invested anywhere. We then take the cash flow from the first year: Cash inflow : £1000 * (100%-7%)
What is the magnitude of daily international financial flows in the early twenty-first century?
Daily international financial flows exceed well over $1 trillion in the early twenty-first century.
