Calculate the Discounted Payback Period.

Q: o calculate the Internal Rate of Return, you need to know what interest rate to start with. True or…

A: Internal rate of return (IRR) is the rate at which NPV is zero

Q: How to find present value annuity

A: Present value: It is the present value of the sum of money that a firm is going to receive at some…

Q: Explain The Need for an External Interest Rate?

A: There is a strong need for the external interest rate because it helps in making financial…

Q: Explain the sequential payout tranche structure?

A: Sequential payout tranche structure In this type of structure interest payments are received by…

Q: Explain payback period

A: Answer: Payback period is nothing but the time a company gets back the money that is originally…

Q: What is the difference between spot rates andforward rates? When is the forward rate at a premium to…

A: Spot rates are the rates that prevail in the cash market or the rates that are applicable today.…

Q: Describe the two forms that the calculation of the payback period can take?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: How to find the incrementa

A: Incremental cost is an additonal cost which a manufacturer incurs due…

Q: Please explain the difference between the terms interest rate and required return by defining each.

A: The amount which is charged by the lender to the borrower in order the use assets is known as the…

Q: Write an equation for determining the value of the series of end-of-period payments?

A: Formula:

Q: Explain the concepts of Bill Discounting

A: When a business engages in bill discounting, a financier (a bank or another financial institution)…

Q: What security provides a good estimate of the short-term nominalrisk-free rate?

A: T-bills are the treasury bills issued by the government. These bills are risk-free and the rate of…

Q: Calulate the effective interest rate.

A: Here, Value of Note is $29,059 Simple Interest Rate is 8% Time Duration of Note is 12 months

Q: Write the discounting formula for the Conversion from Actual to Constant Dollars?

A: Introduction Inflation is a major reason for conversion of actual value to Constant Dollar value.…

Q: The discount rate is the combination of what two types of discounting?   a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: Explain the determinants of credit olicy variables. 2. Explain the hotives for the extension of the…

A: The important dimensions of a firm’s credit policy are credit standards, credit period, cash…

Q: Briefly explain the following a. Relation between present value and interest rate

A: Present value = Applying time value to the future cash flows using interest rates Present Value =…

Q: Compare the process of compounding to determine future values and the process of discounting to…

A: The concept of time money provides information as every unit value of money will decreasing its…

Q: Discuss the present value of an annuity due with an example

A: Present value of an annuity An Annuity is a stream of regular periodic payments made or received for…

Q: Describe the process of using the risk-adjusted discount rateto calculate the net present value?

A: Net present value (NPV) is the excess of present value of cash inflows over the present value of…

Q: Explain how the concept of comparable risk is incorporated into the discount rate.

A: The concept of comparable risk is fundamental to determining the appropriate discount rate to use…

Q: Illustrate with examples , that Interest rate is equivalent to the savings rate from the deposits?

A: Interest received It is the amount that is received to a person for the investment made. A rate at…

Q: List the advantages and disadvantages of the payback method.

A: Payback method is a capital budgeting method which helps to evaluate an investment based on the time…

Q: Define each of the following terms:a. Capital budgeting; payback period; discounted payback period

A: Capital Budgeting is a decision making process in which company requires to evaluate long-term…

Q: What is net interest margin(NİM)?

A: There are various profitability ratios

Q: Give an example on annual rate of return method

A:

Q: List four advantages and four disadvantages of the discounted payback period rule.

A: The four disadvantages of discounted payback period rule can be listed down as follows:   This…

Q: Describe how to find interest rates and time requirements for problems using present value and…

A: Future Value|(FV) is worth of current payment at future date. It is computed by compounding that…

Q: Discuss when and how to use the WACC as a discount rate for valuation.

A: WACC- It is the combined cost of capital of the company. A company generally does not finance…

Q: which of the following is necessary to solve a discount problem?   a.future amount   b.interest…

A: In a discounting problem, the present value of future cash flow is calculated. In order to…

Q: Identify two problems of comparing investments using the payback time.

A: This question explains about  investments using the payback time.

Q: The discount rate can also be referred to as the?

A:

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

Q: Which rate do you need to use in the time value of money calculations?

A: The concept of time value of money (TVM) is a fundamental principle in finance that recognizes the…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.