Question
In case a company considers a discounting factor higher
than the cost of capital for arriving at present values, the present values of cash inflows will be:Solution
If a company uses a discounting factor higher than the cost of capital for arriving at present values, it means that they are applying a higher rate of discount to the cash inflows. This will result in lower present values of the cash inflows as compared to those computed on the basis of the cost of capital.
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A.   Duration of Raw material stage
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