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Sagot :
The discount rate is management's minimum desired rate of return on capital investment.
Discount rate. "management's minimum preferred rate of return on an investment'' is greatly described by using the following terms authentic. Internet gift price and the internal rate of return are examples of discounted cash waft fashions utilized in capital budgeting decisions. NPV will continually decrease.
When evaluating capital funding initiatives, if the inner fee of going back is much less than the required rate of return, the undertaking can be commonplace. Whilst selecting a capital investment task from three options, the undertaking with the best internet present cost will constantly be optimal.
The payback method commonly specializes in profitability and no longer time. One advantage of the internal rate of return is that it considers the time price of money. One drawback of the payback method is that it no longer considers the time value of money.
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