Study On Discounted Rate Risk For Corporation Capital Budgeting Based On Duration

In the process of capital budgeting, the Discounted Cash Flow model is still the basic technical means. It makes the evaluation of returns on capital investment project become a serious part of evaluation for corporation. While, as the important links, such as predicting cash flows, estimating discount rate and so on, they are also indispensable in making capital budgeting. But forecasting cash flow and estimating discount rate is just one kind of method, which is used to deal with uncertainty from subjectivity, and it is risk to a large extent. Aiming to the burning questions in financial management, this paper makes a systemic research on discount rate risk of capital budgeting, based on status quo of risk research in capital budgeting and combining the trend of risk management. The purpose is to get a method of risk management, provide important information and tools, according to hunting after the characters and quantized risk of discount rate risk of capital budgeting. It can build up the stability of corporation's capital budgeting cash flow, reduce the implicit cost from companies' financial crisis, and ensure the objective of maximization of firm value.On the arrangement of frame, there are five parts along the route of "risk analysis-risk measurement-risk management". The first part is introduction and introduces the research purpose, research meaning and study reviews in and out of our country. The second part and the third part respectively analysis's the discount rate risk for capital budgeting and illustrates the evaluation model of discount rate in capital budgeting. The fourth part points out how to apply those models of discount rate risk for capital budgeting, and the last part is conclusion and prospect. On choosing the method, it combines the methods of qualitative analysis and quantitative description to research. According to qualitative analysis, discount rate risk of capital budgeting is confirmed and analyzed. On the basis of duration, the duration ways and mathematic models are used to measure the discount rate risk of capital budgeting, and some examples explain the using process of the measurement model. Using mathematic models to measure the discount rate risk of capital budgeting makes risk management exemplify the objective and scientific characters.Researching discount rate risk of capital budgeting, enrich and develop the theory of capital budgeting risk management has guiding effect in constructing the corporate capital budgeting management system, perfecting corporate management and achieving the corporate strategic objective. So it has some theoretical meaning to research the discount rate risk ofcapital budgeting. While, according to researching the discount rate risk of capital budgeting by the numbers, analyzing, identifying and measuring it, the direction and extent of the change of a project's profit can be gotten when the discount rate changes, and it also can provide some important information and tools, in favor of making the corporate financial management objective come true. So it has important applied cost and operation significance.