Discounted method is used to calculate the present value of any future cash flows. The cost of capital at which the company borrows money determines the discount rate of return to calculate the discounted value of any cash flow. The discount rate used is equal to the working average cost of capital (WACC) or the […]Continue Reading... No Comments.
Now the “Cash Flow” and the interest rate related “Discount Factor” are the most important concept of capital budgeting process. Here in this section we will explain this in details. 1. All the capital budgeting decisions are taken based on the incremental cash flows, not based on the income from the project. To do this […]Continue Reading... No Comments.