Question

1. Explain "physical projects" and "regulatory programs". What is the challenge regarding the regulatory programs?

2. Name two possible discount rate. Also, explain the difference between nominal and real rate

if you do not know the answers please do not answer and i just want short answers not too long. thank you

Answer 1

1. Physical Projects - Physical Projects are tangible outcome projects, that are based on facts and experiments, and can be observed and experienced by involved people. These projects are the outcomes of desired objective of an organization, a group or an individual. Physical projects are based on facts and demonstrated to the audience to understand a specific process or phenomenon. For example - Project to demonstrate how fire alarm works, is an example of Physical project.

Regulatory Programs - Regulatory programs are the standard legal procedures/rules design and formulated for the management of state and other governing bodies.They are designed to provided uniform and common standards for the citizen of the nation. They are bound to be applicable for all the citizens belonging to that particular state, in which regulatory program is implemented.They are governmental functions designed for the living population and their welfare.Example of regulation program is prohibiting the sale of tobacco. This regulatory program is designed for the good health of the people and bound to be followed by all.

Common challenges for regulatory programs are -

• Regulatory body is not always fare and transparent, it leads to loss of trust and inefficiency in its implications
• Regulatory programs some time create differences among the groups of different communities, as it helps one group and has negative effect on other group
• There is no direct feedback to be taken into considerations for the effect of regulatory programs.

2. Two possible discount rates are -

• Weighted average cost of capital (WACC) - This defines the enterprise value of an organization
• Cost of Debt - This discount rate is used to measure the value of fixed-income securities

Difference between nominal and real rate - Real interest rate considers the effect of inflation in its calculation while nominal interest rate does not consider inflation in its calculation. Real interest rate is quantified as nominal interest rate minus the effect of inflation.