• Title, Summary, Keyword: Discount Rate

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Determination of Risk-Adjusted Discount Rate for the Valuation of Technology of Technology Firm (기술기업의 기술가치평가시 위험조정 할인율의 결정)

  • 성웅현
    • Journal of Korea Technology Innovation Society
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    • v.5 no.1
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    • pp.59-71
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    • 2002
  • Risk, or exposure to uncertainty, is an inherent of risk-adjusted discount rate. It is therefore important part factor in the determination of risk-adjusted discount rate. This paper suggests the method to quantify risk and explains the process how to transfer quantified risk into incremental discount rate. The estimates of underlying risks will help determine the size of appropriate risk-adjusted discount rate with logical and scientific way when the technology valuation is made.

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Consumer responses towards combinations of diverse methods notifying price discounts of clothing products (의류제품의 다양한 가격할인 제시방법 결합에 따른 소비자 반응)

  • Jeon, Minjung;Yoh, Eunah
    • The Research Journal of the Costume Culture
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    • v.27 no.5
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    • pp.524-537
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    • 2019
  • The aim of this study was to explore the effect of combinations of diverse methods notifying price discounts (i.e., reference price, odd price, and discount rate signs) and the relationships among product attribute perception, discount perception, attitude toward product, and purchase intention of product. Experiments were conducted where 12 stimuli of different price discount information notifications regarding T-shirt advertisements were presented to 352 informants. The results showed that notification of each type of discount information increased discount perception, whereas no effect due to the size of letters used in the discount rate notification was found. As more price discount information notifications were used, discount perception tended to become stronger. The results of ANOVA analysis show that both product attribute perception and discount perception affected attitude toward the product. In addition, product purchase intention was determined by attitude toward the product as well as price discount perception. Based on these findings, marketers may want to use a combination of methods of price discount notifications in advertisements to deliver price discount information clearly to consumers. Confirmation of discount information using multiple cues would help consumers to notice and perceive price discount information provided by retailers more effectively. Discount information is crucial for increasing both purchase intention and favorable attitude, therefore, diverse strategies regarding discount information presentations should be developed, tested and applied in the real world of retailing.

The Estimation of Compensation for Revoking a License for Fishery Business and Appropriate Discount Rate (어업권 취소에 대한 손실보상액 추정과 이자율)

  • Jung, Hyung-Chan;Chung, Man-Hwa
    • The Journal of Fisheries Business Administration
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    • v.44 no.2
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    • pp.1-17
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    • 2013
  • We investigate the appropriateness of the fixed 12% discount rate to be used in estimating the amount of compensation for revoking a license for fishery business by the Enforcement Decree of Fisheries Act in Korea. We also suggest the appropriate discount rate fully reflecting the change of market interest rate in the Korean financial market. The capital asset pricing model, or, CAPM is the best known model of risk and return, and is widely used to estimate the expected rate of return for the risky projects. Even though the CAPM implies that the discount rate or the expected rate of return should change as the related market factors do, the discount rate used to estimate compensation for revoking a license for fishery business remains to be the same 12% rate for the last 15 years by law. During this period, however, the yield to maturity for the 5-year government bonds in Korea has dramatically changed from about 12% to less than 3%. In order to provide the fair compensation for the damages against the coastal fisheries and evaluate the intrinsic value of fishery resources in the coastal areas, we suggest that the appropriate discount rate should be determined by the yield to maturity of the government bonds with 5-year maturity, instead of the current fixed 12% interest rate.

Review on the Pertinent Discount Rate for the Public Investment Project (공공투자사업(公共投資事業)의 적정(適正) 할인율(割引率) 검토(檢討)에 관(關)한 연구(硏究))

  • Park, Jae Keun;Lim, Jae Hwan
    • Korean Journal of Agricultural Science
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    • v.30 no.1
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    • pp.89-101
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    • 2003
  • For the pre-feasibility study and project evaluation, the discount rate or cutoff rate should be given by the government authority. To get the Benefit/Cost Ratio, NPV(Net Present Value) and IRR(Internal Rate of Return) of the public investment projects, the pertinent and realistic discount rate should be determined to be suitable to the present time period. The cut-off rates in Korea were equivalent to 15% in 1970's, 10% in 1980's and 8% in 1990's. The prevailing rate of discount as 8% is considered not to be suitable for the 2000's public project appraisal considering the present interest rates on deposit and national bonds. To determine the socio-economic feasibility of the public projects, the IRR should be bigger than the present cutoff rate. When we still use the high old rate of discount, the analytical results of project appraisal will show always economically unfeasible. Therefore the new rate of discount suitable for present time should be determined by the government. The public projects to be implemented in 2000 year onward are recommended to be adapted 5% of cutoff rate for the project appraisal and evaluation according to the results of reviewing the tendency of discount rates and market rates of interest in Korea.

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The Moderate Effects of Semantic Cues of discount types on Consumer's Perception and Purchase Intention in Prices Discount Advertising of Clothing Products (의류제품 가격할인 광고시 할인유형의 어의적 단서가 소비자의 지각과 구매의도에 미치는 조절효과)

  • 전영미;정명선
    • Journal of the Korean Society of Clothing and Textiles
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    • v.26 no.9
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    • pp.1342-1353
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    • 2002
  • The purpose of this study was to provide the basic information to be helpful in establishing more rational prices discount strategy in prices discount advertising. The experiment design for study was a $3{\times}2{\times}3$ between subject factorial design in which the factors were discount presentation types(discount price presentation/discount rate presentation/discount price and discount rate presentation), existence of normal price presentation(presentation/ non-presentation) and semantic cues(regular sales/markdown on the previous season's product/storehouse opening sales). Thirty subjects were randomized in one of 18 experimental conditions. The subjects of this study were 540 female university students in Kwangju, Korea. The results were as follows; 1. Significant interaction effects between discount presentation types and the semantic cues were found in perceived transaction value(p<.01), perceived acquisition value(p<.05), and purchase intention(p<.05)- It means that discount presentation types in prices discount advertising need to present differently according to price discount types. 2. Significant interaction effects between existence of normal price and the semantic cues were not found. It means that normal price need to present in prices discount advertising regardless of price discount types.

The Effect of Discount Rates of Korail's Coupon on Redemption Time (코레일 쿠폰 할인율이 쿠폰 상환기간에 미치는 영향)

  • Park, Sang-June;Jeong, Ue-Seong
    • Journal of the Korean Operations Research and Management Science Society
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    • v.36 no.4
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    • pp.17-27
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    • 2011
  • The coupon issued by Korail (Korail's coupon) is characterized by the properties such as a discount rate, an issuing region, a selling region, and a practically discounted rate. The purpose of this study is to investigate their impacts on the redemption time using Log-Normal distribution, and to derive managerial implications for improving Korail's discount program. The result showed that the redemption time was shorter or longer depending a discount rate, an issuing region, a selling region, and a practically discounted rate.

Economic Feasibility of Automatic Egg Washer (계란 자동세척기의 경제적 타당성 평가)

  • Lin, Qing-Long;Yeo, Jun-Ho
    • Current Research on Agriculture and Life Sciences
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    • v.32 no.3
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    • pp.165-169
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    • 2014
  • This study assessed the economic feasibility of an automatic egg washer. Based on various cost benefit analysis methods, including the net present value (NPV), internal rate of return (IRR) and benefit cost ratio (B/C Ratio), the automatic egg washer was confirmed to have economic feasibility. The NPVs were 38,565,991 won at 5% discount rate and 32,013,916 won at 10% discount rate, respectively. The IRRs were 1.325 at 5% discount rate and 1.299 at 10% discount rate, respectively. Finally, the B/C ratios were 1.726 at 5% discount rate and 1.699 at 10% discount rate.

Analysis on Real Discount Rate for Prediction Accuracy Improvement of Economic Investment Effect (경제적 투자효과의 예측 정확도 향상을 위한 실질할인율 분석)

  • Lee, Chijoo;Lee, Eul-Bum
    • Korean Journal of Construction Engineering and Management
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    • v.16 no.1
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    • pp.101-109
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    • 2015
  • The expected economic effect by investment was divided by square of real discount rate annually for change to present value. Thus, the impact of real discount rate on economic analysis is larger than other factors. The existing general method for prediction of real discount rate is application of average data during past certain period. This study proposed prediction method of real discount rate for accuracy improvement. First, the economic variables which impact on interest rate of business loan and consumer price of real discount rate were determined. The variables which impact on interest rate of business loan were selected to call rate and exchange rate. The variable which impact on consumer price index was selected to producer price index. Next, the effect relation was analyzed between real discount rate and selected variables. The significant effect relation were analyzed to exit. Lastly, the real discount rate was predicted from 2008 to 2010 based on related economic variables. The accuracy of prediction result was compared with actual data and average data. The real discount rate based on actual data, predicted data, and average data were analyzed to -1.58%, -0.22%, and 6.06%, respectively. Though the proposed method in this study was not considered special condition such as financial crisis, the prediction accuracy was much higher than result based on average data.

A Determination Method of the Risk Adjusted Discount Rate for Economically Decision Making on Advanced Manufacturing Technologies Investment (첨단제조기술 투자의 경제적 의사결정을 위한 위험조정할인율의 결정방법)

  • 오병완;최진영
    • Journal of the Society of Korea Industrial and Systems Engineering
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    • v.22 no.51
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    • pp.151-161
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    • 1999
  • For many decades, Deterministic DCF approach has been widely used to evaluate investment opportunities. Under new manufacturing conditions involving uncertainty and risk, the DCF approach is not appropriate. In DCF, Risk is incorporated in two ways: certainty equivalent method, risk adjusted discount rate. This paper proposes a determination method of the Risk Adjusted Discount Rate for economically decision making advanced manufacturing technologies. Conventional DCF techniques typically use discount rate which do not consider the difference in risk of differential investment options and periods. Due to their relative efficiency, advanced manufacturing technologies have different degree of risk. The risk differential of investments is included using $\beta$ coefficient of capital asset pricing model. The comparison between existing and proposed method investigated. The DCF model using proposed risk adjusted discount rate enable more reasonable evaluation of advanced manufacturing technologies.

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A Study on the Estimation of Discount Rate for the Technology Valuation of Small-Sized Venture Firm (중소벤처기업의 기술가치평가를 위한 할인율 추정에 관한 연구)

  • Sung, Oong Hyun;Yang, Dong Woo
    • Knowledge Management Research
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    • v.6 no.1
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    • pp.19-32
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    • 2005
  • The reliability of technology valuation depends on, among other things, the reliability of the discount rate estimate. The weighted average cost of capital, generally accepted as discount rate, consists of cost of equity and cost of debt. The model used to estimate the cost of equity for publicly traded firms can not be used directly for small-sized venture firms. In addition, the estimation of cost of debt become very difficult, given the limited and volatile price history, because these small-sized venture firms do not have associated credit ratings. Since two kinds of cost of capital for the small-sized venture firms can not be estimated directly from market data, this study suggests statistical frame works for estimating unknown two kinds of cost of capital. The estimates of underlying cost of capital will help determine the size of appropriate discount rate with logical and scientific way when the technology valuation for small-sized venture firms is made. This study also suggests the necessity of the risk premium for the technology competitiveness to improve the estimation of the appropriate discount rate for small-sized venture firms.

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