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Cash Flow Discounting Rate consideration

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Cash Flow Discounting Rate consideration

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 31, 2019 at 3:33 pm #518077
    sudiptosen
    Participant
    • Topics: 5
    • Replies: 110
    • ☆☆

    Dear Mr Moffat,
    Seek your kind advise

    If question states 4 different rates, which one to be considered for discounting

    1. Entity’s Current Real WACC
    2. Nominal WACC
    3.Risk adjusted value in Real term
    4. Risk adjusted value in Nominal term

    Should I select point 4

    Thanks and have a great evening

    May 31, 2019 at 8:28 pm #518117
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54754
    • ☆☆☆☆☆

    I cannot imagine why you are asking me this, because an exam question will not give you four rates like this!

    As to which rate to use, it is most likely to be 4 (but you would not be given the rate – you would have to calculate it), but it depends on how the cash flows are given and as to whether you are required to calculate the NPV or the APV.

    June 1, 2019 at 12:29 pm #518189
    sudiptosen
    Participant
    • Topics: 5
    • Replies: 110
    • ☆☆

    Than you so much Mr Moffat but I came across one of such mock questions recently. As I have not seen such in any of ACCA’s past questions.

    Have a great day!

    Sudipto

    June 1, 2019 at 4:39 pm #518233
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54754
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Cash Flow Discounting Rate consideration’ is closed to new replies.

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