Question: why do managers employ the subjective approach when assigning a discount rate to proposed projects

why do managers employ the subjective approach when assigning a discount rate to proposed projects

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

timer Corporation manufactures industrial type sewing machines. Makmur Corp. received a very large order from a few Asian countries. In order to be able to supply these countries with its products,...

Q:

Instruction: Answer ALL questions QUESTION 1 (20 marks) Makmur Corporation manufactures industrial type sewing machines. Makmur Corp received a very large order from a few Asian countries. In order...

Q:

Why do you think some managers employ the subjective approach (e.g., guessing a discount rate) in assigning a discount rate to proposed projects?

Q:

The subjective approach to determining risk-adjusted discount rates _____. a. groups projects into risk classes and evaluates all projects in a particular risk class at the same risk-adjusted...

Q:

The subjective approach to determining risk-adjusted discount rates _____. a. groups projects into risk classes and evaluates all projects in a particular risk class at the same risk-adjusted...

Q:

1. A firm has multiple divisions of similar nature, yet varying degrees of risk. To assign required rates of return in the simplest manner possible and yet address the differences among the...

Q:

Think of a new project Dollarama Inc could undertake in response to the new business environment resulting form the COVID-19 effect. A potential project should last for 5-10 years and account for no...

Q:

Using the attached and the unit reading assignment, explore the capital budgeting techniques covered in the unit, NPV, PI, IRR, and Payback. Compare and contrast each of the techniques with an...

Q:

Please provide a maximum one-page summary of how we can analyze the cost of capital for our project (below) vis--visthe peer-reviewed research article attached. Consider risk as you decide. What...

Q:

31. You own a stock that has an expected return of 15.72 percent and a beta of 1.33. The U.S. Treasury bill is yielding 3.82 percent and the inflation rate is 2.95 percent. What is the expected rate...

Q:

A competing process produces rings whose diameters (in centimeters) vary according to the probability density function Specifications call for the diameter to be 10.00.1 cm. Which process is better,...

Q:

Ohio Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Ohio Glass is able to sell all the safety glass that it can...

Q:

Aurora, Incorporated estimates manufacturing overhead costs for the Year 3 accounting period as follows. Equipment depreciation $ 344,000 Supplies 42,000 Materials handling 68,000 Property taxes...

Q:

A company issues 1,050 shares of its common stock for $33,600 cash. Prepare journal entries to record this event under each of the following separate situations.