Present Value Calculations

The same assumptions are made as those given above for the net present value calculations. The rate of return is 13.3% after taxes. 

The capital cost rate tp reflects the company-specific interest rate applied to calculate capital costs on working capital like inventories and outstanding liabilities or used for net present value calculation. In case of market financed corporations, the weighted average cost of capital (WACC) is used as opportunity capital cost rate. WACC considers the mixed financing structure of a company consisting of equity and debt capital4. 

Table 5.5 presents values calculated with ASPEN Plus for the following quantities vapour enthalpy // , liquid enthalpy //, enthalpy of vaporisation ideal gas... 

Risk-adjusted NPV (RPV) (Keown etal, 2002) This is defined as the net present value calculated using a risk-adjusted rate of return instead of the normal return rate required to approve a project. However, Shimko (2001) suggests a slightly different definition where the value of a project is made up of two parts, one forms the not at risk part, discounted using the risk-free return rate, and the other forms the part at risk discounted at the fully loaded cash plus risk cost. 

X ( 2 million - 300,000)/5 years = 102,000 The present value calculation, again using a 15% cost of capital, would be as follows ... 

It is the full price the bond s buyer pays the seller at delivery. However, the very next cash flow received and included in the present value calculation was not earned by the bond s buyer. A portion of the next coupon payment is the accrued interest. From Chapter 1, we know that accrued interest is the portion of a bond s next coupon payment that the bond s seller is entitled to depending on the amount of time the bond was held by the seller. Recall, the buyer recovers the accrued interest when the next coupon payment is delivered. 

The third major component of the new legislation related to the inclusion of derivatives in the cover pools and the net present value calculation of the respective pools. The total volumes of these derivatives are limited to 12% of both the total pool and Pfandbriefe outstanding and to maintain the Pfandbrief reputation for safety, the banks are still prohibited from assuming too much risk, by writing open-ended options and the like. 

ABSTRACT The increased use of wireless networks in schools has created concern among many parents and scientists is the low levels microwave radiation emitted by the transmitters harmful The scientific community does not provide a clear answer, there are uncertainties about the consequences of the radiation. This has raised the issue of applying the precautionary principle and switch off the wireless networks and use a safer alternative, for example a cable system. However, the decision-makers argue that the uncertainties and the risk need to be balanced with the benefits of the activity. Some type of cost-benefit analysis is required. But it is not obvious how such an analysis should he performed in a case like this, and the purpose of this paper is to present and discuss two possible approaches, one based on willingness to pay and one based on expected net present value calculations. 

From this analysis expected net present value calculations are computed as well as crude imcertainty intervals for the actual net present values NPV. The intervals are generated hy Monte Carlo simulation, based on probabihty distributions (triangular) for the various categories of N. It is distinguished between three scenarios it turns out that the effects of wireless networks are severe (probabihty pi), moderate (probability p2) and small (probabihty P3). The results are shown as a function of different values of the probabilities p. 

For the discounted payback period and the net present value calculations, the question arises as to what interest rate should be used to discount the cash flows. This internal interest rate is usually determined by corporate management and represents the minimum acceptable rate of return that the conpany will accept for any new investment. Many factors influence the determination of this discount interest rate, and for our purposes, we will assume that it is always givem... 

Y = yield to maturity or the discount rate used in present value calculations AI = amount of accured interest Ar = accrued interest per dollar of face value AY = approximation of the actual yield CY = approximation of the yield to call... 

Another problem with YTM is that it discounts a bonds coupons at the yield specific to that bond. It thus cannot serve as an accurate basis for comparing bonds. Consider a two-year and a five-year bond. These securities will invariably have different YTMs. Accordingly, the coupon cash flows they generate in two years time will be discounted at different rates (assuming the yield curve is not flat). This is clearly not correct. The present value calculated today of a cash flow occurring in two years time should be the same whether that cash flow is generated by a short- or a long-dated bond. 

The amount of BTEX absorbed in the contactor is a function of its solubility in the glycol used, concentration in the feed gas, absorption pressure and temperature, number of theoretical trays, and glycol circulation rate. The Henry s law constant for benzene in TEG at 1,000 psia is plotted in Figure 11 37, which presents values calculated by Fitz and Hubbard (1987)... 

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