Sensitivity of the Discount Rate to the Expected Payoff in Project Valuation

2017 ◽  
Vol 14 (2) ◽  
pp. 126-136 ◽  
Author(s):  
David Johnstone
2007 ◽  
Author(s):  
Yun Zhang ◽  
Min Yu ◽  
Xinyue Zhou ◽  
Jingjing Lin ◽  
Yi Ni

EDIS ◽  
2017 ◽  
Vol 2017 (4) ◽  
Author(s):  
Ariel Singerman ◽  
Marina Burani Arouca ◽  
Mercy A. Olmstead

The article summarizes the establishment and production costs, as well as the potential profitability of a peach orchard in Florida. Our findings show the initial investment required for a peach operation in Florida to be $6,457 per acre; the expense in land preparation and planting alone in year 1 is $2,541 per acre. Variable and fixed costs in years 2 through 15 average $5,680 per acre. As an example of profitability, when using a 10% discount rate, an operation yielding 6,525 (7,254) pounds of marketable fruit per acre during its most productive years obtains a positive NPV when the average price is $2.38 ($2.13) per pound.


2020 ◽  
Vol 13 (1) ◽  
pp. 71-84
Author(s):  
E.A. Grigor'eva ◽  
A.S. Buzhikeeva

Subject. This article deals with the issues of determining the market value of the trading business, taking into account a number of characteristics. Objectives. The article aims to develop certain provisions of the methodology and practice of evaluating the business of trading organizations, namely, taking into account the additional risk of inventory feasibility when calculating the discount rate. Methods. For the study, we used a systems approach, and the cognition, and economic and analytical research methods. Results. The article presents a three-tiered classification of stocks and a definition of risk based on the criteria for dividing stocks by purpose, degree of implementation, and shelf life in accordance with the scale. Based on the classification, the article offers certain recommendations for determining the discount rate when evaluating trading organizations, aimed at taking into account additional risk. Conclusions. Various evaluation procedures within the framework of traditional approaches and methods in relation to trading organizations do not take into account risk specific to this type of economic activity. The proposed methodology for calculating the discount rate for trade organizations takes into account the features of their functioning.


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