• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 13. Creating a Sensitivity Analy... > Varying the Discount Rate Input

Varying the Discount Rate Input

One input assumption that can have a major influence on your profitability is the discount rate. Chapter 14, “Planning Profits,” discusses the effects of the relationship between fixed costs and variable costs, and the amount of debt financing a company uses. If a company borrows funds to obtain fixed cost assets, then the discount rate—the cost of borrowing funds—has effects on profitability that go well beyond the interest charges.

How sensitive are the financial indicators to changes in the size of the discount factor? Figures 13.10 through 13.12 recapitulate the indicators that result from the base case assumptions.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint