Busıness Fınance Iı Deneme Sınavı Sorusu #973646

What does k denote in the DCF equation above?


Cost of capital

Cash inflow

Cash outflow

Cost of equity

Cash flow


Yanıt Açıklaması:

In the DCF (discounted cash flow) equation, CFo is the cash inflow from the financing source at t=0, CFt is the cash outflow at time to the investors. The cash outflows can be interest or coupon payments, principal repayments and dividend payments according to the capital component employed. The cost of the capital component is denoted by k, which is the discount rate in the above equation. The correct answer is A.

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