If Venerus implements the suggested methodology‚ what would be the range of discount rates that AES would use around the world? * 12% discount rate was used for all projects * Venerus felt that this model worked fairly well * In 1990s this model of capital budgeting was exported to projects overseas * model became increasingly strained with the expansions in Brazil and Argentina * because hedging key exposures such as regulatory or currency risk was not feasible
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Federal Reserves’ discount rate‚ monetary policy‚ and stimulus program through the money multiplier. What are the factors that would influence the Federal Reserve in adjusting the discount rate? According to Chron if prices rise too fast or the economy starts slowing down‚ the Federal Reserve uses the discount rate as a way of manipulating interest rates to stabilize the economy. This change can either increase or decrease how much you ’ll pay to borrow money. How does the discount rate affect the
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The discount rate Main article: Discount rate The rate used to discount future cash flows to their present values is a key variable of this process. A firm’s weighted average cost of capital (after tax) is often used‚ but many people believe that it is appropriate to use higher discount rates to adjust for risk or other factors. A variable discount rate with higher rates applied to cash flows occurring further along the time span might be used to reflect the yield curve premium for long-term
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Cotleanu Andrei Essay What if there were no cars ? I think that life would really change if there were not cars in the world .Nowadays ‚ transportation is very important in our life . People use the cars to go to work ‚ to send their children to their school ‚ or to get to their destination in a very fast way. You can find many reasons why cars are good
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a campaign asking the question “What would the world be without women?” In one particular advertisement we see a average man dressed in women’s clothing and holding a baby‚ with the question “What would the word be without women?” However the Australian clothing may have had the best intentions at heart to empower women and to challenge culture. This ad is asking questions about the role of women and the role of men; Are men co-dependent of women? Could the world survive without them? They may
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cost but you would avoid lay-offs. What cost reduction measures would you implement and why? In airline industry‚ the cost can break to two parts: fixed cost and variable cost. And there is very hard to cutting off of the fixed cost which is including the cost of fuel‚ landing fees‚ insurance‚ etc. because these costs are necessary. If we have to control the operating cost‚ I suggest that we should control the labour cost first. Labour cost typically range between 30-40%
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Three Things I would Change About the World If I had the power to change three things in this world they would have to be: I would change who ran our country‚ I would stop sending our factory jobs to China and Mexico‚ and I would also put a stop to the unnecessary violence going on around us. To me these are three very important issues that need to be changed; by this I think the world would be a better place. I think we need a different president; this isn’t a racist statement or anything of that
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The World would be a better place if the environment that we’re living was clear. According to me‚ our life is threatened and our environment isn’t healthy for us to live anymore. Air‚ soil‚ and water in many parts of the earth were seriously polluted by industrial and chemical waste. Because of increasing amounts of carbon dioxide‚ global warming has occurred. It led to a lot of effects. It makes the climate change. As a result‚ flooding‚ hurricane‚ tsunamis‚ tornados‚ and cyclone happen everywhere
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$42 per share. Assume the expected rate of return on Federated’s stock is 18 percent. • Taxes: Federated’s marginal tax rate is Tc = .35 What are the key assumptions underlying your calculation? For what type of project would Federated’s weighted-average cost of capital be the right discount rate? 2. Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later its debt ratio is down to 15 percent (D/V =.15 ). The interest rate has dropped to 8.6 percent. Recalculate
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AES - Case Analysis & Write up How would you evaluate the capital budgeting method used historically by AES? What is good and bad about it? Previously‚ the economics of a given project were evaluated at an equity discount rate for the dividends from any project and as it was mostly financed through local debt‚ which was non-recourse to the parent company‚ AES use to evaluate the dividend cash flows at a standard 12%. It is a simple approach with portions of sound reasoning. One could argue that
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