Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 10DQ: What is the role that the required rate of return plays in the NPV model? In the IRR model?
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Question
Explain HPRs and Inflation?
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Step 1
Answer:
Holding period returns (HPRs):
Holding period return (HPR) is one of the investment performance indicators that are most relevant and simple. HPR can be defined as the return on asset or a return on portfolio over the entire period during it was held.
Holding period return is calculated by using the following formula,
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