payback period, NPV, and IRR always lead to the same decision? Why or why not? If not, which one should be used?

Q: What are the implications of the weak‐form, semi-strong-form, and strong-form of the EMH for…

A: The Efficient Market Hypothesis (EMH) describes a stock market that is both operationally and…

Q: a. What is the IRR of cach alternative? b. What is the present value of costs of cach alternative?…

A: Capital budgeting is a technique that is used widely by companies to evaluate projects to make the…

Q: is the intuition behind multiples or comparables valuation? What are the advantages of this m

A: Multiple method is very common method of valuation of stock in market.

Q: Label each of the following statements as either true (“T”) or false (“F”). An opportunity cost is…

A: Answer:   True.

Q: which alternative is the best choice?

A: Time value of money(TVM) means that the amount of money received in the present period will have…

Q: What are the shortcomings of the internal rate of return criterion?

A: Solution- Internal Rate of Return (IRR)-      The Internal Rate of return (IRR) is that the discount…

Q: What assumptions and limitations does multiples valuation have?

A: Multiple valuation or relative valuation is a market based valuation method where the target company…

Q: Besides the dollar cost, what other costs should you consider when comparing alternative solutions…

A: A company will incur various costs to earn revenue. The costs can be either direct or indirect costs…

Q: What are the appealing qualities of Payback Screening?

A: The payback method is the simplest way of checking the viability of the project. The payback method…

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash…

Q: What is the principal objection to the payback method?

A: The Payback period is one of the traditional or non-discounting techniques of Capital budgeting. It…

Q: Why do most of the engineers prefer Rate of Return Analysis to the PW method?

A: Answer: They would be calculating the present worth of cash flows using a net present value…

Q: A project with a negative NPV should be rejected. O True O False

A: Net present value  = present value of future cash inflows discounted at desired rate of return -…

Q: Why do conflicts sometimes arise between the netpresent value (NPV) and internal rate of return(IRR)…

A: The basic assumption between NPV and IRR method is the cash flows are reinvested. In the NPV method,…

Q: Is an higher NPV better than a lower NPV and why?

A: The net present value is the difference between sums of the present value of cash inflows and…

Q: Why is the additional risk not taken without expected additional return?

A: The risk-return tradeoff takes note of that the potential return increments with an expansion in…

Q: Future costs that do not differ among the alternatives are not relevant in a decision.

A: In accounting when it comes to making decisions we classify costs into different types or…

Q: What is the definition of "FMS option"?

A: Stock Option: An investor who purchases a stock option has the right, but not the responsibility, to…

Q: What is the intuition behind multiples or comparables valuation? What are the advantages of this…

A: Answer : What is the intuition behind multiples or comparable valuation? The intuition behind…

Q: Would you expect an abandonment option to increase or decrease a project’sexpected NPV and risk (as…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: What is residual value? Support your answer with an example

A: Residual value is also called as salvage value

Q: Which alternative should be selected? Use a challenger-defender rate of return analysis.

A: Given,  Particulars Projects A($) B($) C($) D($) Initial investment 8500 18500 26500 30000…

Q: What is an opportunity cost and why should it be included when making decisions?

A: Opportunity costs is the costs of next best alternative foregone by accepting current alternative.…

Q: What are the two keys in short-term decision making?

A: Definition:   Differential analysis: Differential analysis refers to the analysis of differential…

Q: Explain the Trade-Off between Risk and Reward?

A: The trade-off means to lose one thing to achieve another thing. For example An organization is…

Q: It could be said that strategy invalidates the net present value rule Explain the reasoning behind…

A: The net present value rule is an investment concept stating that projects should only be engaged in…

Q: Is the accept-or-reject decision rule the same as in the simple -investment case? Explain how?

A: Yes, accept or reject decision rule is the same as in the simple investment because accept or reject…

Q: What exactly does "FMS option" mean?

A: The term FMS stands for flexible manufacturing system. It is a manufacturing system which is…

Q: What is the decision rule for payback?

A: Payback period is the period of time taken by the project to recover the investment in such project…

Q: Describe the Replacement Analysis using the Opportunity-Cost Approach?

A: The company always considers the replacement projects when the old machinery or plant in the project…

Q: ple of when one would choose to use the Payback Period Method instead of the NPV / IRR me

A: Step 1 One of the most important decisions a business owner or management team will ever make is to…

Q: which investment is preferable?

A: The present value is the present worth of the amount that will be paid or received at present.

Q: Do NPV and IRR always yield the same conclusion (accept or reject a project)? If not, when do they…

A: Net Present Value is the difference between present value of cash inflows and present value of cash…

Q: Distinguish between simple and nonsimple investment with examples?

A: A simple investmentUnder it, there is negative initial cash flow and in the series of net cash flow,…

Q: What is opportunity cost? Select one: O a. It is the cost of the worst opportunity when we choose…

A: Cost: In accounting, the cost is related to monetary value spend on raw material, services, and…

Q: Future costs that do not differ among the alternatives are not relevant in a decision. True or False…

A: A expense that is anticipated to be incurred in the future is referred to as a future cost. It is…

Q: What is a real option?

A: Real option It may be a selection made open to a firm's supervisors approximately the commerce…

Q: When we work with the breakeven point, how important is it to understand what a decision variable…

A: The question is related to Marginal Costing. The break-even point is that level of sales at which…

Q: What is a real option? What are some types of realoptions?

A: Real options: Real options are considering as right but not obligation to take a business decision.…

Q: What are the weaknesses of the payback method?  What other options do you have?

A: Pay back period is period required to recover initial amount of investment.

Q: t is objective?...

A: Objective vs subjective trading: Most traders follow either an essentially objective or subjective…

Q: “All future costs are relevant in decision making.” Do you agree? Why?

A:

Q: Why is it important to remember that payback screening is not an end in itself?

A: The payback period is defined as a number of years takes by a project to recover the initial cost of…