Discount Rate in NPV Calculations
{"Image DocumentName": "Discount Rate in NPV Calculations", "Image ImageDescription": "In the previous example, we assumed that the project was riskless. In real life, the future cash flows from a project are estimated rather than known. Let\u2019s say, Alpha Corp. estimates that with 50% chance the cash flow will be  117, or it will be  97. The expected cash flow will be (0.5) (117) +(0.5) (97)=  107. Suppose the project is as risky as the market and expected return on the market is 10%. NPV= /1.10 = - 2.73. Expected return on the project is 7%. If the investors gets the cash in dividends and invest it at the market, the expected return is 10%.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}