Methods that ignore the time value of money in capital investment appraisal include which of the following?
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Methods that ignore the time value of money in capital investment appraisal include which of the following?
a.
b. Discounted payback
c. Average
d. All of the above
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- The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion? A. payback method B. accounting rate of return C. internal rate of return D. inventory turnoverA realized return is the rate of return actually earned on an investment. Group of answer choices True FalseWhich of the following are present value methods of analyzing capital investment proposals? a. internal rate of return and average rate of return b. average rate of return and net present value c. net present value and cash payback d. net present value and internal rate of return
- The most accurate way to analyze the profitability of an investment is to compute the payback period. A. True B. FalseThis method evaluates the return of an investment by dividing the annual average income by the average investment, Select one: a. Discounted Approach b. Simple rate of return Method c. Cash Payback Method d. Internal Rate of Return MethodWhich capital investment methods require the use of a present value table? Payback and net present value Internal rate of return and net present value Payback and internal rate of return Accounting rate of return and internal rate of return Accounting rate of return and net present value
- (b) Explain the relationship between net present value and internal rate of return, and show how they may offer complementary methods for evaluating investments.Explain what is meant by Accounting Rate of Return (ARR) and Net Present Value (NPV) in the context of investment appraisal. Discuss at least TWO advantages and TWO disadvantages of each method.This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero. Group of answer choices A. internal rate of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
- Which approach to investment analysis is "best" in terms of accounting for both the timing and amount of revenue streams from a potential investment? A. the payback period B. the simple rate of return C. the net present value D. the internal rate of returnExplain how the cost of capital serves as a screening tool when using (a) the net present value method and (b) the internal rate of return method.Generally, the ____ is considered to be a more realistic reinvestment rate than the ____. a. risk-free rate; cost of capital b. risk-free rate; internal rate of return c. cost of capital; internal rate of return d. internal rate of return; cost of capital