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Cost of capital

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Cost of capital

  • This topic has 3 replies, 3 voices, and was last updated 7 years ago by Anonymous.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
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  • December 8, 2015 at 11:28 pm #289382
    Chris
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hi john,
    How do you calculate the discount factor values to use if for example the cost of capital is 4.2% as the table only gives for whole values,

    Thanks

    May 21, 2018 at 2:58 pm #453138
    fatinka
    Participant
    • Topics: 0
    • Replies: 2
    • ☆

    Hi! If it was not given a whole values, use this formula: 1/(1+r)^n where r is interest rate; not is years

    May 21, 2018 at 2:59 pm #453139
    fatinka
    Participant
    • Topics: 0
    • Replies: 2
    • ☆

    I meant n is number of years

    June 7, 2018 at 6:05 pm #457604
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 4
    • ☆

    If you do use the discount factor to calculate MV, yield or interest of a bond, then you must use the formula above.

    But if it is for a general NPV, you are allowed to round to the nearest whole number.

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