Question
NPV calculations used a 9.0% discount rate for cash flows related to the store cash flows and a 4.0% discount rate for credit-card cash flows.
NPV calculations used a 9.0% discount rate for cash flows related to the store cash flows and a 4.0% discount rate for credit-card cash flows. Why does the company use different hurdle rates for the store and the credit cards? What process could you use to estimate these discount rates to see if they are reasonable?
Step by Step Solution
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Step: 1
Using different discount rates for store cash flows and credit card cash flows can be based on various factors including the risk associated with each ...
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Understanding Financial Accounting
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald
1st Canadian Edition
1118849388, 9781119048572, 978-1118849385
