Describe the two forms that the calculation of the payback period can take?

Q: Define the term loan cash flow?

A: Statement of cash flow: It refers to a financial statement that shows all the cash payments and…

Q: How is the revaluation surplus handled under the revaluation model?

A: The question is related to Revaluation model under IAS16 Property, Plant and Equipment. Under this…

Q: Define the structure of interest rates and list two theories used to explain the structure.

A: Introduction Structure of interest rates: The yield curve, or term structure of interest rates,…

Q: Explain the meaning of the term Time value of money by providing examples

A: Time Value of money means a sum of money right now is worth more than a sum of money received at a…

Q: Why does the time value of money component arise?

A: Time value of money: The value of amount on hand today is more value than the value of amount…

Q: Explain The Need for an External Interest Rate?

A: There is a strong need for the external interest rate because it helps in making financial…

Q: What is meant by Short-term financing?

A: Finance refers to the study of money , currency as well as the capital assets.There are basically…

Q: Explain the sequential payout tranche structure?

A: Sequential payout tranche structure In this type of structure interest payments are received by…

Q: Explain payback period

A: Answer: Payback period is nothing but the time a company gets back the money that is originally…

Q: What is the Relationship between the Incremental Cost and the Loan-to-Value Ratio?

A: The question is based on the concept loan to value ratio and its relationship with incremental cost.

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

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Give me the formula of net present value

A: Net Present Value of a project is equivalent to the difference between the present value of cash…

Q: Please explain the difference between the terms interest rate and required return by defining each.

A: The amount which is charged by the lender to the borrower in order the use assets is known as the…

Q: Write an equation for determining the value of the series of end-of-period payments?

A: Formula:

Q: What is the discounted-payback method?

A: Payback period states the number of years that is taken by the project to recover the investment of…

Q: What security provides a good estimate of the short-term nominalrisk-free rate?

A: T-bills are the treasury bills issued by the government. These bills are risk-free and the rate of…

Q: Differentiate between the Loan and Project Cash Flows?

A: Loan Cash Flows:   It refers to the borrowing of unsecured nature that is used by small businesses…

Q: Explain the Accumulation of a Future Sum?

A: The concept which gives the value or worth of money held today at the future date due to its…

Q: Illustrate with examples , that Interest rate is equivalent to the savings rate from the deposits?

A: Interest received It is the amount that is received to a person for the investment made. A rate at…

Q: How can we calculate the net present worth of each payment?

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: List the advantages and disadvantages of the payback method.

A: Payback method is a capital budgeting method which helps to evaluate an investment based on the time…

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: When is a project in Need for an External Interest Rate?

A: When net cash flow that is generated by the project during the project’s life is reinvested, then…