Check all that apply: Owhen IRR is positive, the project is acceptable when profitability index is positive, the project is acceptable a decrease in a firm's WACC will increase the attractiveness. investment options when required return is less than internal rate of return, the p popoptoblo
Q: A project has an initial cost of $34276 and a three-year life. The company uses straight-line…
A: Average accounting rate of return( on basis of initial investment). =( average net income ×100) ÷…
Q: CT firm had $6,300 cash at the beginning of the period. During the period, the firm collected $1,700…
A: Cash is very important in the business because cash is life line in the business and business…
Q: A loan is amortized by level payments made at the end of each quarter, for 25 years: The monthly…
A: Amortization refers to the breakdown of loan payments into principal and interest portions. It…
Q: your department manager has proposed in the capital budget for 2016 that the organization acquire an…
A:
Q: Ratios that measure how efficiently a firm manages its assets and operations to generate net income…
A: concept. Turnover ratios are useful for evaluating efficiency with which a business utilizes its…
Q: Decide whether the statement makes sense. Explain your reasoning. 1. I am young and I am looking for…
A: When you invest money that you must think risk and return trade off and how much risk you can take…
Q: You are trying to convince an investor into buying a rental apartment unit that fetches a rent of…
A: Present value is the equivalent value of money today that is to be received in the future times…
Q: Efficient Market Hypothesis
A: In financial economics, the efficient-market hypothesis (EMH) holds that asset prices accurately…
Q: A firm has an outstanding bond with a $1,000 par value that is convertible at $40 per share of…
A: Conversion ratio = Price of convertible security/Conversion price Where, price of convertible…
Q: Stocks A, B and C have a monthly return and variance of: (10%, 0.0036), (15%, 0.0009) and (3%,…
A:
Q: Berdwen, Inc. is analyzing the merits of a potential project. There is great volatility in the…
A: The question is related to Capital Budgeting. The tow technique used to evaluate this project are 1.…
Q: What is the order of payment to the investors from the highest to the lowest priority? Multiple…
A: concept. On liquidation of company , all the assets of company are realized and then all the…
Q: A real estate broker has a listing where the seller agreed to should capital gains tax and broker's…
A: Given: Commission Rate: 5% Net Proceeds Required After Tax: P4,895,000 Capital Gain Tax : Assumed…
Q: When identifying undervalued and overvalued assets, which of the statements below is false? An…
A: Required rate of return is the minimum return which investors would need for investing in an asset.…
Q: The spot price of gold is currently $ 1,706 /oz, while the 6-month forward price is $ 1,732/oz.…
A: We have the spot rate, forward rate and the gold lease rate. We need to find the repo rate.
Q: Fourteen years and three months ago, you took out a 30- year loan of $300,000. The loan has a 7% APR…
A: Mortgage payments are the fixed amount paid by the borrower to the lender that includes the interest…
Q: for your explaination on the second one, i think you mean the answer is B. as you stated it will…
A: The expected return on high beta stock will be generally decreased because their beta generally…
Q: 24. duration is a direct measure of interest rate risk a. the lower the duration, the lower the…
A: An assessment of a bond's interest rate risk called duration takes into account the maturity, yield,…
Q: A high-water mark of $115.25 million was established two years ago for Korean Fried Chicken (KFC)…
A: Solution: Management fees is the basic fees charged on the fund value (whether beginning or end) and…
Q: Explain the factors responsible for determination of the firm's optimal Fixed assets capacity
A: Answer Firstly optimal level of fixed assets depend on the Nature of the business because it…
Q: Suppose the cost and the demand for a daily product is: C=10 d(p) = D(1 - w(p)) = 200-10p What is…
A: We have the demand and the cost function. We need to find the total contribution (profit) based on…
Q: Your company has been doing well, reaching $1.04 million in earnings, and is considering launching a…
A: Free cash flows for year 0=(11,22,000) Year 1 =1,283,176.46 Year 2 = 1377,453.26…
Q: You bought a call option at strike $ 60 for a price of $ 6 and sold a put option at strike $ 70 for…
A: We have a long position in call option and a short position in the put option. We need to find the…
Q: Company X reports $200,000 in sales of Widgets in 2019. The Costs of Goods sold for these Widgets is…
A: We have to find the Gross Profit Margin and Operating Margin, based on the select financials…
Q: Study Guide 7. Section 9-1: Ralph is interested in buying a cargo van with a base price of $22,245.…
A: Sticker price includes base price, Options price, and Destination charge. The base price is…
Q: Locust Inc. owes $13,000.00 to be repaid by monthly payments of $470.00. Interest is 11% compounded…
A: Honor Code: Since you have posted a question with multiple sub-parts, we will provide the solution…
Q: Which of the following statements is true? A. Because of flotation costs, dollars raised…
A: A. Because of flotation costs, dollars raised by retaining earnings must work harder than…
Q: Questions 19 and 20 are related. Assume that two investors each hold a portfolio, and that…
A: We have two questions related to the portfolios otherwise identical except the beta value. They have…
Q: Ex) Explain why do we use different Brownian motions for the stock price S(t) and X(t) in the…
A: In the Feynmann-Kac representation formula, Brownian motion is used to model the random evolution of…
Q: en has cash receipts at the end of each month amounting to ₱5,000 with the first being received on…
A: Price / Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv],…
Q: finish your engineering degree with $17,350 in student loans. The interest rate on your loans is…
A: Loans are paid the monthly payments and these monthly payments are equal and fixed and these carry…
Q: A perpetuity pays $100 each and every year forever. The duration of this perpetuity will be _______…
A: Yield to maturity (r) = 0.10 Annual payment = $100 Duration = ?
Q: What is the discounted value of payments The discounted value is $ Round the final answer to the…
A: Present value is the equivalent value of the money today based on the time period and interest rate…
Q: Scheduled payments of $890 due today, $525 due in 15 months, and $555 due in 33 months are to be…
A: The concept of TVM states that money has an inherent interest-earning capacity, making money earned…
Q: unded to the
A: Annual Depreciation Expenses = (Cost of fixture- Salvage value )/ 4
Q: An investor is considering investing in one of the three stocks shown below: Stock Standard…
A: Risk The uncertainties that are present in the investment process which may lead to a loss on the…
Q: Assume that the initial outlay and depreciable base for a new project is 100,000. It is a 3 year…
A: The company generally accepts project that has positive NPV. The positive NPV shows the project will…
Q: Elsa is planning to set-up an education fund for her daughter. She plans to invest $6,600 annually…
A: Future Value of Annuity: The future value of the annuity represents the worth of the recurring…
Q: ng Rate of Return Method c. Time Value of Mone
A: An advantage of this method is that it highlights how a capital investment can affect a company’s…
Q: 35. What is the value of a three year $100 coupon bond with 10% coupon rate when the discount rate…
A: The bond present value is a sum of the present value of its future coupon and face value payment.
Q: Suppose Firm 1 is 100% equity financed. Firm 1 has a project available that offers a 10% return on…
A: Required return for the firm is calculated using following equation Required rate of return = Risk…
Q: Mr. Roxas pays monthly amortization of P54,100 for a parcel of land. The amortization factor for 5…
A: A mortgage is a loan taken out to purchase property with the property acting as collateral. It is…
Q: Increasing financial leverage will create value. A. True OB. False
A: Financial Leverage is use of borrowed funds for financing business needs or for executing expansion…
Q: On January 1, 2020, a bank have issued a 5-year term loan to a businessman. The following details of…
A: The time period of the loan is 5 years The interest rate per annum is 16% The repayment structure is…
Q: * AFV IS 50,000* *annual rate is 9%* Build a calculator to solve for "t" In the column you should…
A: We need to derive an expression for the variable "t" in the time value of money equation showing the…
Q: uppose that the current EUR/GBP exchange rate is £0.86 per euro. The current 6-month interest rates…
A: In the international business exchange rate matter the most and the volatility in the exchange rate…
Q: What is the advantage of using comparative statements for financial analysis rather than statements…
A: Comparative statements Comparative statements are the financial statements over more than one…
Q: Suppose a portfolio is given as follows: Investment Name ABC Corn Mill X-Treme Manufacturing b.)…
A: The expected return of Portfolio is calculated with the help of following formula Expected Return…
Q: Cash flow stream for 2 projects are given below: Year 1 2 3 4 Project A $ 300 400 50 50 Project B $…
A: Concept. 1. Payback period is the time required to recover initial investment. Project having lower…
Q: 30 - With reference to the Security Market Line, assume for the current time period the Risk-Free…
A: The Security Market Line (SML) is a graph that shows the relationship between the expected return on…
Step by step
Solved in 2 steps
- If an investment project has a negative net present value (NPV), which one of the following statements about the internal rate of return (IRRT) of this project must be true? Select the correct response: The IRR is negative. The IRR is less than the company's weighted average cost of capital. The IRR is equal to zero. The IRR is greater than the company's weighted average cost of capital.The firm should accept a project if: the profitability index is greater than or equal to 1. the payback period is less than the life of the investment. the internal rate of return is positive. the internal rate of return is greater than the accounting rate of return.Which of the following statements is CORRECT? a. The NPV profile graph for a normal project will generally have a positive (upward) slope as the life of the project increases. b. An NPV profile graph shows how a project's payback varies as the cost of capital changes. O c. An NPV profile graph is designed to give decision makers an idea about how a project's contribution to the firm's value varies with the cost of capital. d. An NPV profile graph is designed to give decision makers an idea about how a project's risk varies with its life. e. We cannot draw a project's NPV profile unless we know the appropriate WACC for use in evaluating the project's NPV.
- The relationship between NPV and IRR is such thata. both approaches always provide the same ranking of alternative investment projects.b. the IRR of a project is equal to the firm's cost of capital if the NPV of a project is $0.c. if the NPV of a project is negative, the IRR must be greater than the cost of capital.d. none of the aboveIf a net present value analysis for a normal project gives an NPV greater than zero, an internal rate of return calculation on the same project would yield an internal rate of return ____ the firm's cost of capital.a. greater thanb. less thanc. equal tod. cannot be determined from the information givenWhich of the following statements is most FALSE? A. If a project with normal cash flows has a positive NPV, it will definitely have an MIRR greater than the cost of capital. B. If a project with normal cash flows has an IRR that is greater than the cost of capital, then taking on that project would decrease the value of the firm. C. If a project has normal cash flows, then the MIRR has to be between k and IRR if the project has positive interim cash flows (cash flows between t=0 and the end of the project). D. If a project with normal cash flows does not have any interim cash flows, the project's IRR will equal the project's MIRR. E. Multiple IRRS can exist for a project if the project has nonnormal cash flows. OA OB OC
- Q. A positive NPV forecast for a new project is reliable only if it is based on Multiple Choices: - forecasts of cash flows. - identifiable sources of economic rents. - Michael Porter's theories. - results from Monte Carlo analysis.Your firm is considering what has been estimated to be a positive NPV project (NPV > 0). What can you say or infer about the project's payback period, discounted payback method, IRR, profitability index, and accounting rate of return (Please be thorough)?which of the following statement is true>? 1. return on equity is the ratio of total assets to total net income 2. one must know the discount rate to compute the npv of a project but one can compute the IRR without referring to the discount rate. 3. there will always be one IRR regardless of cash flows 4. one must know the discount rate to compute the IRR of a project but one can compute the NPV without referring to the discount rate 5. payback accounts for time value of money
- Consider the relationship between a project’s net present value (NPV), its internal rate of return (IRR), and a company’s cost of capital. For each scenario that follows, indicate the relative value of the unknown. If cost of capital is unknown, indicate whether it would be higher or lower than the stated IRR. If NPV is unknown, indicate whether it would be higher or lower than zero. Project 1 is shown as an example.You should accept a project when the ?: net present value is negative. profitability index is positive. payback period exceeds the required period. AAR is greater than the required return. 7. Which one of the following statements is correct? The payback period is also referred to as the benefit-cost ratio. The internal rate of return can be reliably used for all independent projects. The profitability index is used when the investment funds are limited. The net present value should not be used to rank mutually exclusive projects. 8. You should accept a project when the ?: net present value is negative. profitability index is less than 1 but greater than 0. discounted payback period is less than the required period. AAR is less than the required return. 9. The crossover point ? : is used to determine which one of two internal rates of return for a project should be used when determining if a project should be accepted. 2. is the…Which of the following statements is correct? a. Since investors prefer more return and less risk, one will never hold a dominated asset in the risk-return sense. In other words, if asset A has a higher expected return and lower standard-deviation than asset B, then investors would only hold asset A in their optimal portfolio. b. The IRR method correctly ranks mutually exclusive projects. c. When an investment project is evaluated today, the spending that occurred in the last year has to be included in the NPV analysis. d. The payback period criterion properly considers the time value of money. e. When there are two mutually exclusive projects, the project with the highest NPV should be chosen.