VAE 511: Livestock Entrepreneurship (1+0)

DISCOUNTED MEASURES

• Here the cash flows which are accrued in the project are discounted with an appropriate discount rate.They take into account of the time value of money. A rupee does not have the same value over time.That is, its value or purchasing power in terms of goods and services declines.
• Generally the existing interest rate is taken as discount rate for this purpose.
• The discounted cash flows are the best estimates to measure the worth of the projects.
• The three important discount rate measures are
  • Net Present Worth (NPW)
  • Benefit Cost Ratio (BCR)
  • Internal rate of Returns (IRR)