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Discount Rate—Explanation, Definition and Examples

Valutico

FEBRUARY 27, 2024

It is calculated by weighting the cost of equity and cost of debt based on their proportions in the capital structure. Internal Rate of Return (IRR): IRR represents the discount rate at which the net present value (NPV) of all cash flows from the investment becomes zero.

Discounted Cash Flow 52
Discounted Cash Flow Risk Premium Risk-free Rate Weighted Average Cost of Capital 52
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Modeling Managers as EPS Maximizers

Reynolds Holding

APRIL 25, 2023

In business schools, managers are taught to maximize the net present value (NPV) of future cash flows. In the real world, managers consistently ignore this advice. When asked, they repeatedly say they maximize earnings per share (EPS).

Net Present Value 59
Net Present Value Corporate Finance Finance Equity 59
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