Discount factor and Environmental concerns: Difference between pages

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'''1.'''
''Environmental, social and governance concerns (ESG).''


(DF).
Environmental concerns include climate change, nuclear energy and sustainability.


The number less than one which we multiply a single future cash flow by, to work out its present value as:
Other environmental concerns include biodiversity loss, greenhouse gas (GHG) emissions, renewable energy, energy efficiency, air, water or resource depletion or pollution, waste management, stratospheric ozone depletion, changes in land use, ocean acidification, and changes to the nitrogen and phosphorus cycles.
 
PV = DF x future cashflow.
 
 
The periodic discount factor is calculated from the periodic [[yield]] as:
 
DF = (1 + periodic yield)<SUP>-n</SUP>
 
 
Commonly abbreviated as DF(n,r) ''or'' DF<SUB>n,r</SUB>
 
Where:
 
n = number of periods.
 
r = periodic yield (or periodic cost of capital).
 
 
 
<span style="color:#4B0082">'''Example 1: Discount factor calculation'''</span>
 
Periodic yield or cost of capital (r) = 6%.
 
Number of periods in the total time under review (n) = 1.
 
 
Discount factor = (1 + r)<sup>-n</sup>
 
= 1.06<sup>-1</sup>
 
= 0.9434.
 
 
The greater the time delay, the smaller the Discount Factor.
 
 
<span style="color:#4B0082">'''Example 2: Increasing number of periods delay'''</span>
 
Periodic yield or cost of capital = 6%.
 
The number of periods delay increases to 2.
 
Discount factor = (1 + r)<sup>-n</sup>
 
= 1.06<sup>-2</sup>
 
= 0.8890.
 
''(A smaller figure than the 0.9434 we calculated previously for just one period's delay.)''
 
 
 
'''2.'''
 
Historically, the yield or cost of capital used for the purpose of calculating Discount Factors, as defined above. 
 
For example the 6% rate applied in definition 1. above.




== See also ==
== See also ==
* [[Annuity factor]]
* [[B Corporation]]
* [[Certificate in Treasury Fundamentals]]
* [[Biodiversity]]
* [[Certificate in Treasury]]
* [[Corporate governance]]
* [[Compounding effect]]
* [[Emissions]]
* [[Compounding factor]]
* [[Environmental & Social issues]]
* [[Cumulative Discount Factor]]
* [[Environmental crime]]
* [[Day count conventions]]
* [[Environmental Impact Assessment]]
* [[Expected credit loss]]
* [[Environmental profit and loss]]
* [[Factors]]
* [[Environmental risk]]
* [[Present value]]
* [[EPs]]
* [[ESG]]
* [[ESG investment]]
* [[Greenhouse gas]]  (GHG)
* [[Non-Financial Reporting Directive]]
* [[Ocean acidification]]
* [[Social concerns]]
* [[Sustainability]]


[[Category:Cash_management]]
[[Category:The_business_context]]
[[Category:Liquidity_management]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_reporting]]

Latest revision as of 21:46, 11 May 2022

Environmental, social and governance concerns (ESG).

Environmental concerns include climate change, nuclear energy and sustainability.

Other environmental concerns include biodiversity loss, greenhouse gas (GHG) emissions, renewable energy, energy efficiency, air, water or resource depletion or pollution, waste management, stratospheric ozone depletion, changes in land use, ocean acidification, and changes to the nitrogen and phosphorus cycles.


See also