How can we Consider Project Risk by Discount Rate?

Q: Is the net-investment test the only way to accurately predict projectborrowing?

A: Net investment refers to the total amount of money that a company invests in capital assets which is…

Q: Which is the better investment option?

A: The process of finding the present value using the future value, interest rate and the compounding…

Q: Determine the internal rate of return of a project?

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: How does the higher project risk reflect a higher anticipated variability in a project's NPW?

A: The Net Present Value (NPV) and the risk are unequivocally related. With a wrong hazard appraisal,…

Q: What is the NPV of the project?

A: Capital budgeting methods are the methods used for finding the profitability of the investment…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: What is project financing? What are its advantages and disadvantages?

A: Project financing: It is a type of subsidizing for the most part foundation overwhelming,…

Q: ta. What is the project's payback?

A: It refers to the time period that is required to get an amount invested in a project with some…

Q: Explain the types of investment risks with practical examples.

A: Investment risk - Investment risk is the probability of incurring losses from an investment made in…

Q: How can we aggregate the risk over the project life in terms of net present value?

A: It is an incorporation of the risk level of the project over the life of the in terms of NPV by way…

Q: What are some possible financial decisions in which using the Present Value (PV) formula might be…

A: The present value (PV) is the current value provided a defined rate of return of a future amount of…

Q: What is required // calculate the required rate of return with an opinion on acceptance or rejection…

A: Rate of return is the return is the return received from an investment. It is the real return…

Q: What are the pitfalls of project and portfolio?

A: Project portfolio analytics are the tools, algorithms, and heuristics necessary to evaluate…

Q: Define the term Trade-Off between Risk and Reward?

A: Risk-Reward trade off refers to an investment principle which indicates higher the risk, higher is…

Q: Draw a graph showing the feasible set of risky assets, the efficientfrontier, the risk-free asset,…

A: To sketch the graph showing the feasible set of risky assets, the efficient frontier, the risk-free…

Q: Explain risk-neutral valuation

A: A risk-neutral valuation is a probability measure used to help pricing derivatives and other…

Q: Describe the methods of determining the Project Risk?

A: Project risk is an uncertain event or circumstance that affects at any rate one objective of a task,…

Q: Why do we need to predict how certain costs will behave in response to change activity in project…

A: Cash flow analysis is the way by which financial health of the company can be checked. In this…

Q: what is net present value in project management?

A: Net present value (NPV) is an important technique that is been used by the project manager in order…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: What is the potentially acceptable investment alternative?

A: An alternative investment is a financial asset that doesn't can be categorized as one of the…

Q: Why is the net-investment test the only way to accurately predict projectborrowing? Explain with an…

A: Definition: Net- investment measures the company's assets and investment like property, software,…

Q: What is option value (of project)?

A: Option value of the project is the real option approach of evaluating projects that views selecting…

Q: How do flexibility options affect projects’ NPVs and risk?

A: Fluctuations factors such as demand, interest rate levels are common which may affect future…

Q: Calculate the risk neutral probability

A: Risk neutral probability = (er*Δt - d)/(u-d) r is risk free rate. Δt is time period between each…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Q: How can I calculate the NPV of an investment?

A: Net present value:- Net present value is the investment evaluation technique, where we evaluate…

Q: Can we consider Project Risk by Discount Rate?

A: The discount rate is an interest rate that is used in computing the present value of the future cash…

Q: What are the methods of describing Project Risk?

A: The project risk is an unpredictable occurrence or situation that has an effect on at least one…

Q: ) What are the factors affecting the discount rate used in project valuation?

A: Discount rate also called as Weighted average cost of capital is used for discounting future cash…

Q: Define the term risk?

A: Types of risk: Investment risk Market risk Inflation risk Business risk Liquidity risk

Q: How can we consider the Future Worth and Project Balance?

A: The question is based on the concept of evaluation of long term investment, future worth and project…

Q: How can we determine whether the project under consideration is of normal risk?

A: Introduction: Risk is nothing but the variation in real returns obtained as opposed to expected…

Q: Why might recognizing the existence of a real option raise, but not lower, a project’sNPV as found…

A: Real Options are rights which enable the  management to take  decisions  regarding business…

Q: What type of projects does the Payback method favor?

A: Payback method: It implies to a method of evaluating investment projects by computing the time, it…

Q: Define the term Profitability Index? How can we consider the profitability index of a project?

A: The profitability index (PI), then again alluded to as the value investment ratio (VIR) or profit…

Q: If a firm can structure a project such that expenditures can be madein stages rather than all at the…

A: When expenditure of any project are made in different stages rather than at the beginning then the…

Q: What is the typical discount rate used with the Net Present Value (NPC) when project risk is the…

A: The net present value (NPV) is the discounted value of benefits less the initial costs. The values…

Q: Illustrate the main factors of Project Risk?

A: The project risk is defined as the uncertain event or condition that occurs mainly on positive or…

Q: When can a project may fail the net-investment test?

A: Yes, a firm can initiate the withdrawal of the amount invested from the investment pool in which…

Q: List the factors of time and uncertainty of investment project?

A: Investment projects are a complex environment and there are many risks involved. one of those group…

Q: What is the project's internal rate of return?

A: Answer has been given in the next sheet.

Q: What is the project’s payback period?

A: Payback period: A project's payback period can be described as the number of years to recover the…