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The Present Value of a Positive Future Inflow Can Become

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The present value of a positive future inflow can become negative as discount rates become higher and higher.


Definitions:

Reorganization

Financial restructuring of a failing firm to attempt to continue operations as a going concern.

Going Concern

An assumption that a company will continue to operate in the foreseeable future, without the intention or necessity of liquidation.

Financial Restructuring

The process of reorganizing a company's financial structure through various means, including changing the mix of debt and equity.

Capital Structure

The mixture of debt and equity that a company uses to finance its operations and growth.

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