The length of time required for an investment to generate cash flows sufficient to recover its initial cost is the:O net present valueinternal rate of returnpayback periodprofitability indexdiscounted payback period

Net Present Value It is the amount of present value of the cash inflows net of cash outflows. It…

Answered: The length of time required for an…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 3SEQ: The expected period of time that will elapse between the date of a capital investment and...

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Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value method
This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
How does the size of the initial investment affect the internal rate of return on the net present value models?
The present value of an investment's future cash flows divided by its initial cost is the: O Net present value. O Internal rate of return. O Average accounting return. O Profitability index. O Payback period.
The ____ of an investment is the period of time for the ____ to equal the initial cash outlay. a. profitability index; present value of the cash inflows b. payback period; cumulative cash inflows c. payback period; present value of the cash inflows d. None of these are correct
Payback period is the time in which the initial cost of an investment is expected to be recovered through the cash inflows generated by the investment. Briefly discuss the pros and cons of payback period?
Describe the strengths and weeknesses of the following:: Cash payback period Adverage accounting rate of return Excess present value index Capital expenditure analysis Calucating net present value
Compute for the following: 1. Accounting rate or return based on the average investment 2. Net Present Value 3. Traditional Payback Period
The measurement basis most often used to report a long-term payable representing a commitment to pay money at a determinable future date is Historical cost. Current cost. Net realizable value. Present value of future cash flows.
This method solves for the interest rate that equates the equivalent worth of a project's cash outflows (expenditures) to the equivalent worth of cash inflows (receipts or savings). O A. Payback Period O B. Profitability Index O C. Rate of Return O D. MARR
The net present value is ... O A. The return which is required for an investment O B. The current worth of a future stream of cash O C. The length of time it takes to recover the initial investment of a project O D. The sum of a time series of discounted cash inflows and outflows
The internal rate of return method assumes that the cash flows over the life of the project are reinvested ata. the risk-free rate.b. the firm's cost of capital.c. the computed internal rate of return.d. the market capitalization rate.

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