Discount rate

RISK-ADJUSTED DISCOUNT RATES and LIABILITY BETA RUSSELL E. BINGHAM T H E H A R T F O R D FINANCIAL SERVICES G R O U P Table of Contents Page 2 3 5 7 8 11 12 13 14 14 15 16 17 17 18 Subject Abstract 1. Summary 2. Total Return Model 3. After-Tax Discounting 4. Derivation of Risk-Adjusted Discount Rate and Liability Beta Figure l : Baseline Risk / Return Line vs Leverage 5. Liability Beta Figure 2: Equity vs Liability Beta Figure 3: Equity Beta vs Risk-Adjusted Discount Rate (After-Tax)

INTRAGENERATIONAL DISCOUNTING * Consumption rate of interest cum shadow price of capital method (CRI-SPC Method) * The level of public investment should be based on individual preference for present consumption vs. future consumption * The marginal rate of time preference * Investment is simply a means of using resources that are potentially available for consumption now in order to increase consumption later * Individuals typically have a positive rate of time preference * They

Discount rate. The discount rate is defined by the Federal Reserve as, “ how much the United States central bank charges its member banks to borrow from its discount window to maintain the reserve it requires” (www.federalreserve.org). If for example, the discount rate is set low, banks will be more likely to borrow from the central bank and increase the reserves. With increased reserves the federal funds rate will also decrease, which in turn will indirectly effect all other aspects of the economy

Hansson Private LabelHansson Private LabelHansson Private 1. How would you describe HPL and its position within the private label personal care industry? HPL is a mid-sized private label manufacturer of personal care goods. In 1992, the company acquired production assets from Simons Health and Beauty Products, and through increased efficiency had enjoyed growth within the sector. The company’s production is estimated to account for about 28% of the $4 billion sold in their product category, generating

same as in the OEC market. TOM Tyres intends to raise prices at 1 percent above the inflation rate; variable costs will also increase at 1 percent above the inflation rate. In addition, the SuperTread project will incur $25 million in marketing and general administration costs the first year. This cost is expected to increase at the inflation rate in the subsequent years. TOM Tyres’ corporate tax rate is 40 percent. Annual inflation is expected to remain constant at 3.25 percent. Automotive industry

It is necessary to discount a project at a reasonable rate, because, the money we have at hand today will less valuable than the money in future. Why is the so, the value of money today will be less compared to what the same money value can buy in the future because money value also fluctuates

Collinsville case study 1. Which firms are the “identical twins” of the Collinsville investment? Using the β’s for those assets and the methodology learned in this course, determines the appropriate discount rate for the Collinsville investment. We are interested in obtaining the asset beta for Collinsville investment. Here from the reading material, we find there were altogether 6 chemical companies that produce sodium chlorates. They are Hooker, Pennwalt, American, Kerr-McGee, Brunswick and

the cause of these depletions are market processes (Huggins, 2003: 57-71). There are two factors that need to be considered in relation to sustainable development in order to measure and reduce the impacts of the issues facing sustainability. Discount rates are generally used to calculate the future benefits that can be benefited today. Property rights are generally used as a tool to achieve sustainable development. What is sustainable development? Sustainable development is the theory

us a better look at the microeconomics of New Orleans and allows us to better estimate the benefits of a recovery effort. Also to better understand the value of these benefits I will be discounting the FV of the benefits by three important discount rates.

Global Perspectives on Accounting Education Volume 5, 2008, 17-25 FIRST MOTORS CORPORATION: A CLASSROOM CASE ON IMPAIRMENTS Tim Krumwiede College of Business Bryant University Smithfield, Rhode Island USA Emily Giannini Graduate Student, College of Business Bryant University Smithfield, Rhode Island USA ABSTRACT This case requires a detailed analysis of impairments of both long-lived assets and goodwill for First Motors Corporation, a fictitious automobile company. By integrating multiple issues