If an investment project will positively affect the cash flows of other products the firm currently sells (increasing the flows), this is cannibalization and therefore should be counted in the investment project’s expected cash flows. tRUE OR FALSE

Q: Your company is considering two different methods of producing its product: purchase production…

A: Generally, maximizing firm value is a key objective for a company, as it reflects the overall wealth…

Q: How are human and physical capital investment decisions similar? How do they differ? What determines…

A: Physical capital is the stock of equipment and structures used as an input to produce goods and…

Q: One of the indirect costs of financial distress is having to sell assets at lower than market value.…

A: Indirect costs of financial distress is not the directly present cost in the financial statements…

Q: Why should the managers make investment decisions on the basis of cashflows rather than profits?

A: Net income: The bottom line of an income statement which is the result of excess earnings from…

Q: From a financial perspective, how are projects chosen when capital rationing exists? Do you think…

A: In this question, we are required to determine how projects are chosen based on capital rationing…

Q: Disadvantage of the payback method include: Answer choices are below: A) does not consider cash…

A: The correct answer is D) all of the above. The payback method indeed has several disadvantages. It…

Q: Which of the following is true of the cash payback period? a.the longer the payback, the longer the…

A: Payback period is the period under which the amount of investment is expected to be recovered.…

Q: Which of the following contributes positively to the value of a real option to delay investment?…

A: Real option:A real option is a selection made open to a firm's managers on prospects for business…

Q: A firm should never undertake an investment if accepting the project would cause an increase in the…

A: It is wrong to say so. The expected return on investment (ROI) of a project related to the cost of…

Q: Value One category of capital investment evaluation methods does not use present value. The primary…

A: Cash Pay Back Method and Accounting Rate of Return are two Traditional methods of capital budgeting.…

Q: Is this statement true or false? Please explain in detail Companies should always finance projects…

A: Return on investment or ROI is referred as the financial metric, which measures the probability for…

Q: Check all that apply: Owhen IRR is positive, the project is acceptable when profitability index is…

A: IRR is the internal rate of return at which present value of cash flow is equal to initial…

Q: Which of the following statements is false? (You may select more than one answer.)a. The payback…

A: Cash payback method: Cash payback period is the expected time period which is required to recover…

Q: Two firms- A and B- have same cash conversion cycle. But firm A have poor inventory conversion…

A: CCC stands for Cash Conversion Cycle is defined as the metric which states the time it requires the…

Q: In calculating the incremental after-tax cash flows associated with a particular investment, the…

A: Sunk Costs is that cost which was already incurred on the project before starting the Project these…

Q: Which of the following is true about the WACC? It’s the appropriate discount rate for all new…

A: Solution:- Weighted Average Cost of Capital (WACC) means the minimum rate of return required by the…

Q: Ignoring differences in the useful lives of investments when evaluating ca

A: Capital expenditures are distinct from operating expenditures, which are day-to-day spending…

Q: Which of the following statements is most CORRECT? A. Some projects with normal cash flows have…

A: In the field of finance and capital budgeting, various methods are used to evaluate investment…

Q: True or False: It is often impossible to forecast the cash flows from follow-on projects associated…

A: TRUE

Q: How can we reduce investment risks by asset diversification?

A: Answer: Diversification is nothing but the strategy that reduces the risk by allocating assets to…

Q: Is this statement true or false? please explain in detail The Discounted Cash Flow method is the…

A: The value of an investment is calculated using the discounted cash flow (DCF) approach based on the…

Q: Would research and development and marketing be working capital? Can we take operating profit and…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: A key difference between the IRR and the MIRR is a. cash flows are assume be reinvested at the risk…

A: IRR is rate of return at which present value of cash flow is equal to initial investment in the…

Q: Which of the following are significant flaws with the Payback Period Method? (Select all that apply)…

A: Payback period method is a capital budgeting method which will help in finding time period within…

Q: Why does a company evaluate both the money allocated to a project and the time allocated to the…

A: "Since you have asked mutiple question we will be solving first question for you,If you want any…

Q: Which of the following statements is False regarding the payback period method: DA Use as a tool in…

A: Statement -D is false.As payback period method is Non- discounting cash flow criteria…

Q: A firm should never undertake an investment if accepting the project would cause an increase in the…

A: It is wrong to say so. The expected return on investment (ROI) of a project related to the cost of…

Q: How do investors reduce investment risk by asset allocation and diversification?

A: Investment risk is a risk of potential financial loss built into the investment. For example:…

Q: When evaluating projects using internal rate of return,?  A. projects having lower early-year cash…

A: Internal rate of return is the rate of return at which the net present value is equal to zero.…

Q: Although discounted cash flow decision techniques have become widely accepted, their use depends to…

A: Capital budgeting decisions are important decisions are to be made by the business. These decisions…

Q: What are the likely effects of a policy in which a company fails to adjust for difference in risk…

A: The cost of capital is a critical financial concept for companies. It represents the return expected…

Q: Many businesses finance their investment activities internally. Should internal financing affect the…

A: Internal financing: Under internal financing, a business firm uses its profits or assets as a…

Q: Which of the following is a disadvantage of the IRR project evaluation method? Question 5Select…

A: IRR is also known as Internal Rate of Return.. It is a capital budgeting technique which helps in…

Q: How can a company’s operations generate a healthy profitand yet produce meager or even negative cash…

A:

Q: Many firms still use the internal rate of return rule instead of net present value. When used…

A: The net present value (NPV) and internal rate of return (IRR) are the methods that are used for the…

Q: Why is an investment more attractive to management if it has a shorter payback period?

A:

Q: . If the company reduces its DSO without seriouslyaffecting sales, what effect would this have…

A: DSO is an abbreviation for Day’s sales outstanding which if increased by the manager will allow…

Q: Why would a company choose to factor itsreceivables, given that it will get less money than…

A: Sales means delivery of goods and services by the seller. It can be for cash sales or sales made on…

Q: cash conversion cycle

A: Cash conversion cycle is a metric that the company uses to measure the time that it would take to…

Q: Which of the following statements is correct? - NPV method is the only method firms should use to…

A: Mutually exclusive projects Mutually exclusive projects are projects that are in direct competition…

Q: Securitization has its upside (primarily liquidity and diversification), but it has its downside as…

A: Securitization is a complex financial process where assets are bundled together and transformed into…

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.