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Advantages
- considers time value of money.
- involve risk by making discount rate as a function of proposal risk.
- helps in finding future wealth generated by risky project.
Disadvantages
- determination of RADR itself or risk adjusted premium.
- does not adjust future cash flow which are risky and uncertain.
What else can I help you with?
Briefly explain Advantages and disadvantages a flexible exchange-rate system?
define exchange and whts its advantages and disadvantages
What is the relationship between the discount rate and inflation rate in financial analysis?
In financial analysis, the discount rate and inflation rate are related because the discount rate is typically adjusted to account for inflation. When inflation is higher, the discount rate is also higher to reflect the decreased purchasing power of future cash flows. This adjustment helps ensure that future cash flows are properly valued in present terms.
To increase a given present value the discount rate should be adjusted?
To increase a given present value, you would generally lower the discount rate. This is because a lower discount rate reduces the impact of future cash flows, making the present value higher. Conversely, increasing the discount rate would decrease the present value.
What were the disadvantages and advantages of being an apprentice?
The advantages are that you can learn new skills in a particular trade and you gain a qualification in that trade. One of the disadvantages is that your pay rate might not be that good while you are an apprentice
What were the advantages and disadvantages of being and apprentice?
The advantages are that you can learn new skills in a particular trade and you gain a qualification in that trade. One of the disadvantages is that your pay rate might not be that good while you are an apprentice
What are the similarities and differences between the risk-adjusted discount rate and the certainty equivalent methods for incorporating risk into the capital-budgeting?
The primary difference between the certainty equivalent approach and the risk-adjusted discount rate approach is where the adjustment for risk is incorporated into the calculations. The certainty equivalent approach penalizes or adjusts downwards the value of the expected annual free cash flows, while the risk-adjusted discount rate leaves the cash flows at their expected value and adjusts the required rate of return, k, upwards to compensate for added risk. In either case the net present value of the project is being adjusted downwards to compensate for additional risk. An additional difference between these methods is that the risk-adjusted discount rate assumes that risk increases over time and that cash flows occurring later in the future should be more severely penalized. The certainty equivalent method, on the other hand, allows each cash flow to be treated individually.
What are the advantages and disadvantages of bill of exchange?
bill exchange is at an advantage of getting items by exchanging at a fair rate
Advantages and disadvantages of crawling peg rate system?
A crawling peg exchange rate system allows a currency's value to be adjusted gradually based on specific indicators, providing stability and predictability for trade and investment. Advantages include reduced volatility, which can enhance economic planning and boost investor confidence. However, disadvantages include the potential for speculative attacks if the adjustments are perceived as insufficient, and the challenges for policymakers in determining the appropriate rate of adjustment while maintaining competitiveness. Additionally, it may limit the central bank's flexibility in monetary policy.
Can you put the word discount rate in a sentence?
I'm calling to check on your best discount rate. I bought this paint at a discount rate. The discount rate does not apply on Saturdays.
Advantages and disadvantages of preference share?
Some of the advantages of the preference share is the absence of the fixed regular income and less capital loses. Some of the disadvantages includes the dilution of claim over assets and the high rate of dividends.
Advantages and disadvantages of Amplitude Shift Keying?
Information transmission rate is higher. carrier power remain constant
What are advantages and disadvantages of zigbee wireless technology?
Advantages 1. low cost 2.low power consumption 3.highly reliable 4.secured Disadvantages 1.low transmission rate 2.smaller distance
