Can we compute the IRR for each option without knowing the revenue figure? Why?

Q: What is the profitability index? When is it used?

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

Q: lue (NPV) anc g decisions? Pl

A: Introduction : Net present value  can be understood as the value which depicts the actual worth…

Q: Are there sources of value in an investment? what they are? and give an example for both?

A: Yes, there are various sources of value in an investment. An investment is a stock or a bond. People…

Q: Create a chart reflecting the conventional payback period?

A: The question is based on the calculation of payback period.

Q: what are the meaning of Revenue Enhancement and Cost Saving ? and I need examples for each.

A: Revenue enhancement is the enhancement or increase in the revenue, which also leads to an increase…

Q: what is the effect of making changes to net present value calculations

A: Net Present Value = Present value of future cashflows - Initial Investment

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: state the limitations of the payback pe

A: Answer : The payback period is the quantity of time needed for cash inflows generated by a project…

Q: How does an “opportunity cost”,  subtracting from the revenue of an alternate course of action,…

A: Opportunity cost: Opportunity cost is a loss of income from one alternative if another alternative…

Q: Give an example of an irrelevant future cost. Why is it irrelevant?

A:

Q: e main hindrances in valuation estimates in busiiness valuation?

A: Introduction Knowing how much an asset is worth and what factors influence its value is critical for…

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: What is the total investment approach?

A: Total Investment Approach: In the Total Investment Approach, there is a risk-return tradeoff in the…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Assume benefit is unchanged, how to manipulate  the cost to have positive NPV (net present value)

A: Net Present Value is the difference between PV of all cash inflows (benefits) and PV of all cash…

Q: Why is it difficult to assign a dollar figure to an intangible cost? Can it ever be done? Explain…

A:

Q: How do you turn an income statement int a forecasted return? And how is it helpful?

A: Return means earn additional on invested amount. Return is a positive factor in every investment.…

Q: What was the margin of safety in revenue?

A: Margin of safety in revenue = Fixed cost/Contribution margin ratio

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: What is the impact of changing transportation costs on incremental analysis?

A: 2. Impact on Pricing and Revenue:-Product Pricing: Fluctuations in transportation costs can affect…

Q: o you think a person would opt to use the Payback Period Method instead of the Net Present Value or…

A: Given information : . NPV refers to the difference between the sum of the present value of expected…

Q: What do we mean by internal rate of return (IRR)?

A: Internal rate of return : Internal rate of return is one of the techniques used in capital budgeting…

Q: Which project has no rate of return?

A: Answer: IRR is a measure in capital budgeting used to measure the value of the predicted…

Q: payback period, NPV, and IRR always lead to the same decision? Why or why not? If not, which one…

A: Step 1   One of the most essential choices a business owner or management will ever make is capital…

Q: The marginal cost of an asset is equivalent to its EUAC. True or False?

A: Marginal Cost of Asset means the cost required to run the asset for the next period. EUAC =…

Q: How can I calculate the NPV of an investment?

A: Net present value:- Net present value is the investment evaluation technique, where we evaluate…

Q: percentages?

A: Percentages mean the amount of something, that is being expressed as a number out of 100.…

Q: How can we invest in two assets with similar return characteristics?

A: An asset is something that provides benefits in the future to its owner. There are two types of…

Q: What are some reasons that net PP&E might grow proportionally tosales, and what are some reasons…

A: Property, plant & equipment are company's long term assets important for the company's…

Q: Does the Present Value (PV) technique is based on return?

A: One of the important decisions that are taken by the management is to make the investment decisions…

Q: What is market Value added? What is economic value added? What is the difference between what each…

A: Market value added is the amount of wealth that the company is able to create for its stakeholders.…

Q: Why Pay back period method is not as effective as NPV?

A: Payback method  It doesn't consider account inflation as well as the cost of capital. It ignores…

Q: Could you show how to find the internal rate of return IRR using excel and the payback period for…

A: IRR represents the rate of return that makes the project's net present value equivalent to zero.

Q: Why should the total costs of the machine be viewed as an asset and allocated against the future…

A:

Q: What are annuities received? Also, how does the calculation of expected return and the calculation…

A: It is considered as a payment stream of an equal amount which would likely occur at a regular time…

Q: What are the shortcomings of the payback period?

A: Payback period: The payback period assesses the time period required to recover the initial…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.