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Assessing The Non-Financial Investment Profitability With Variable Discount Rate

Author

Listed:
  • Katarzyna Gwozdz

    (Wroclaw University of Technology)

Abstract

In the work, the subject of the discount rate assessment is presented. The discount rate is usually considered as constant in the whole investment period, which seems to be the main problem. The constant discount rate does not take into account the actual money loses value in time. Moreover, the discount rate elements can change in time, and it should be remembered that many factors, which could also change, influence the value of those elements. The research confirms that the assumption of using the constant discount rate is erroneous. In the work one can find i.a. the methods of own capital assessment or the proposal of different techniques of risk premium valuation.

Suggested Citation

  • Katarzyna Gwozdz, 2015. "Assessing The Non-Financial Investment Profitability With Variable Discount Rate," Oeconomia Copernicana, Institute of Economic Research, vol. 6(4), pages 123-138, December.
    • Handle: RePEc:pes:ieroec:v:6:y:2015:i:4:p:123-138
    DOI: 10.12775/OeC.2015.032
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    cost of equity capital; risk premium; CAPM;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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