Answer:
''there will be at most as many POSITIVE rates...''
Explanation:
The measure of investments' rate of return which excludes external factors such as inflation is known as Internal Rate of Return(IRR)
It is used in;
(1). Savings and loans.
(2). Liabilities
(3). Fixed incomes
(4). Private equity and capital management.
(5). Maximizing total present value and so on.
It can be calculate using the formula below:
NPV= C(n)/(1+r)^n = 0
That is internal rate of return can be use in solving NPV = 0.
Therefore, 'With respect to engineering economics and the internal rate of return (IRR), Descartes’ rule of signs indicates there will be at most as many POSITIVE rates of return as there are sign changes in the cash flow profile.''
Answer:
expansion should be undertaken as it has a positive net present value
Answer: The answers are explained below.
Explanation:
• Cost of debt: The cost of debt is the interest rate that a company is charged on its debts. It is the interest paid on bonds, loans etc. The cost of debt is usually the before-tax cost of a debt.
• Cost of equity: The cost of equity is the return a firm pays to its equity investors e.g shareholders in order to reward them for the risk taken by investing their capital. Companies need capital to operate and grow hence, individuals and organizations who provide funds to such companies are rewarded.
• After tax WACC: The Weighted Average Cost of Capital (WACC) is a firm's combined cost of capital including preferred shares, common shares, and debt after the deduction of tax.
• Equity Beta: It measures the sensitivity of the stock price to changes in market. Equity Beta is also called levered beta.
• Asset beta: It is the beta of a firm without the effect of debt. It is a company's volatility of returns without its indebtedness.
• Pure play comparable: The pure play comparable is the taking of the beta estimate of another company that is comparable and in same line of business.
• Certainty equivalent: It is the guaranteed return that an individual would take now, rather than awaiting a higher but uncertain return later in the future.
