Challenges in advanced management accounting
Challenges in advanced management accounting

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Challenges in advanced management accounting

4.2.3 Risk and time delay

People sometimes think that if cash flows occur further into the future, they are riskier so should be discounted at a higher rate. This is incorrect: the discount rate is already applied and compounded each year, so cash flows further into the future are discounted at a higher rate in proportion to the amount of time you have to wait until they occur. If risk is constant over time (e.g. the same discount rate is applied for each additional year), then the discount rate already takes into account the increased risk with greater time into the future.

B392_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus