Discussion questions

timer Asked: Jul 4th, 2013

Question description

Negative rates - and deflation - do exist should organizations seriously consider using negative required rates of return if the current environment supports them or should they go with something like the organization's normal estimated required return? 

When the rate is negative (such as when deflation is a major concern) the net present value is actually higher as it reflects the increased value of future cash flows.

How does this make the decision more or less difficult to make, if any, particularly when the financial health is a concern?

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