What is the Discount Factor NPV ?

What is the Discount Factor NPV ?

Didn't find your answer?

Hello everyone, 

I was wondering if some of you guys could help me understand what the Discount factor is for the following below ?

CKHats will be selling for $25, VC is $10 for every unit. Both the SP, VC are in current price, and the SP inflation will be forcasted to 5% every year.

Also VC inflation will be 6% and there is no increase in fixed costs. Now Producing and selling CKHats will mean increase in Working Capital and also every year

investment in the working capital for CKHats will be 8% of the sales revenue for that year. Tax 30%, machinery can be claimed using straightline over a 6

year period it has no scap value and after tax cost of capital is 15% for investment appraisal.

Now my question to you guys is what will be my discount factor be I assumed it would be the 15% just not sure, also I haven't written down the

whole question as I would like to attempt it myself.

Many thanks.

Replies (5)

Please login or register to join the discussion.

avatar
By cparker87
12th Jan 2015 21:56

Crikey..
This takes me back. I think it is 15% too.

Thanks (0)
avatar
By Outofpractice
12th Jan 2015 22:37

if this is a homework question there is an area for this
There is an area on the website for students to ask for help on homework questions etc. The any answers area should really only be used for real life situation questions.

Thanks (0)
Replying to SXGuy:
avatar
By Sahara
12th Jan 2015 23:00

Apologies, I am new here and will remember to post in the correct section next time.

 

Thanks for quick responses,

Thanks (0)
By mrme89
12th Jan 2015 23:05

Here's the link. 

Here's the link. 

https://www.accountingweb.co.uk/group/student-discussion-group

 

Thanks (0)
Replying to marks:
avatar
By Sahara
12th Jan 2015 23:38

Thanks, mrme89 I have now joined that group and will post the Q there.

Thanks (0)