One of the following methods are not a method to evaluate projects: Return on investment Discounted payback method Return on capital employed O Net present value method O Return on equity
Q: The difference between APV approach, NPV approach and Weighted Average Cost of Capital approach to…
A: Capital budgeting is a technique to evaluate the profitability or value of the project by using…
Q: A project is accepted if, Net present value of the project is positive. IRR is lower than cost of…
A: Net Present Value method is used to ascertain whether the proposal should be selected or rejected…
Q: Apply the procedure to find the true IRR, or return on invested capital, of the mixed investment?
A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…
Q: Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs…
A: A sunk cost is the cost that has been incurred as a result of past events and such cost may not be…
Q: Which of the following should NOT be included as a cash flow in initial, operating or terminal cash…
A: There are various different costs associated while taking a capital budgeting decision.
Q: how a failed capital project may shape the future strategy of investment capital.
A: Introduction: Capital projects are nothing but a long term capital intensive initiative aimed at…
Q: Under what conditions can a firm’s weighted average cost of capital be used for assessing new…
A: Weighted average cost of capital is also known as the WACC. This is the rate which must be earned by…
Q: Explain how a net present value (NPV) profile is used to compare capital projects. How does this…
A: NPV also known as net present value is basically the present value of all the future cash flows.…
Q: Discuss the difficulties in using Net Present Value [NPV] as an investment appraisal method.
A: The net present value method is used by the company for the evaluation of the profitability of…
Q: Explain how a net present value (NPV) profile is used to conpare capital projects. How does this…
A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…
Q: Discuss the advantages and disadvantages of using (a) payback, (b) net present value and (c )…
A: Payback Period: It refers to the period in which the project's or investment's initial cost is…
Q: If a net present value analysis for a normal project gives an NPV greater than zero, an internal…
A: NPV greater than 0
Q: Why the payback method is often considered inferior to discounted cash flow in capital investment…
A: Payback period is capital budgeting technique which tells how much time will it take for Ann…
Q: Which of the following statements is (are) true about project appraisal methods: (i) NPV is the…
A: (i) NPV is the best measure for project appraisal even when capital is rationed. There is no such…
Q: which of the following should not be included in the cash flows for project analysis?…
A: Meaning of the given options: Opportunity cost : It is the benefit foregone from not selecting the…
Q: If net present value for a project is negative, then____. a. IRR is equal to Cost of capital b. IRR…
A: Net present value is the difference between the present value of cashflows discounted at the cost of…
Q: Which of the following is NOTa relevant cash flow and thus should not be reflected in the analysis…
A: Sunk cost is the cost that has been incurred and it would not be recovered in future. It depends on…
Q: Consider the following statement: In a capital rationing problem withdivisible investments, if all…
A: Capital rationing is a technique used in capital budgeting to maximize profitability by restricting…
Q: Payback period, accounting rate of return, net present value, and internal rate of return are common…
A: Decision criteria are the evaluation parameters that influence the selection or rejection of capital…
Q: Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a…
A: Capital investment is defined as an amount, which used to get invested in the corporation for…
Q: Payback period is one of the nondiscounting models used in capital investment decisions. What are…
A: Payback period refers to the period in which the initial investment is recovered.
Q: Which of the above statements are correct?
A: Net Present Value: It is the present value of the annual cash flows and the initial cost of the…
Q: xplain why sunk costs should be excluded from a capital budgeting study while opportunity costs and…
A: answer are as follows
Q: What are the principal objections to the use of the average rate of return method in evaluating…
A: Average rate of return: Under this method, the average net income is used in evaluating the capital…
Q: Compare capital budgeting decision criteria, Net Present Value (NPV) and Internal Rate of Return…
A: Part (1): Answer: Net present value approach predicts how much a future project would add to the…
Q: hich methods of evaluating a capital investment project ignore the time value of Multiple Choice Net…
A: A Capital Investment project refers to the expenses involved in a project which will eventually help…
Q: Short term investment decisions are also called as Select one: O a. Liquidity decision b. Finance…
A: Investment decisions can be both short term and long term
Q: 1. State the criterion for accepting or rejecting independent projects under each of the following…
A: Capital budgeting is a technique to evaluate long term projects. For evaluating, various methods are…
Q: ith the use of an example, briefly explain the main difference between the ex-ante and the ex-post…
A: Main Difference between ex-ante and the ex-post opportunity cost of capital: Ex-post risk is…
Q: Which of the following is/are true for the average accounting return method of project analysis? I.…
A: Average Accounting Rate of return is used for capital budgeting decision for a project. The Average…
Q: The method that measures a projects return based on present values is the: Internal Rate of Return…
A: The current value of an investment based on the return, which will be received on a predefined…
Q: The cost of capital represents a. the capital outlay required in a project. b. the initial…
A: The Cost of Capital is a representative of cost of the current total capital financing of the…
Q: For a capital investment project to be acceptable, it must generate a rate of return A) Less than…
A: The correct answer id Option (B).
Q: The weighted average cost of capital is used to determine whether or not a project should be done.…
A: Solution:- Weighted Average Cost of Capital means the minimum return which a firm should earn in…
Q: What is meant by an investment project’s internal rate of return? How is the internal rate of return…
A:
Q: Compare capital budgeting decision criteria, Net Present Value (NPV) and Internal Rateof Return…
A: Part (a): Answer: Net present value approach predicts how much a future project would add to the…
Q: If a capital project has a hurdle rate higher than its internal rate, then its profitability index…
A: Solution Explanation- A hurdle rate is the minimum rate of return required on a project or…
Q: A project is accepted if, I) II) III) Net present value of the project is positive. IRR is lower…
A: Capital budgeting is referred as the process of decision making which is used by companies to…
Q: The ARR has one specific advantage not possessed by the payback period in that it a.considers the…
A: Definition:
Q: State two assumptions when doing capital rationing using a PW analysis for unequal-life projects.
A: Introduction: The planned structure of the revenue’s cost is known as the budget. The projects that…
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- Which methods of evaluating a capital investment project ignore the time value of money? Multiple Choice Net present volue and accounting rate of retum, Accounting rate of return and internal rate of return. Internal rate of return and payback perlod.Methods that ignore the time value of money in capital investment appraisal include which of the following? a. Net present valueb. Discounted payback c. Average rate of return d. All of the aboveWhich 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
- 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 turnoverWhich of the following does nor assign a value to a business opportunity using time-value measurement tools? A. internal rate of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. payback period methodWhich of the following is/are true for the average accounting return method of project analysis? I. does not need a cutoff rate II. ignores time value of money II. is based on project's cash flows IV. easily obtainable information for computation Multiple Choice I only I, II, II, and IV
- Explain how a net present value (NPV) profile is used to compare capital projects. How does this profile compare to that of internal rate of return (IRR)? How does reinvestment affect both NPV and IRR? Support your rationale with at least one citation from the literature.Which 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 returnDiscuss the advantages and disadvantages of using (a) payback, (b) net present value and (c ) internal rate of return as a method of capital investment analysis.
- Would you rather invest in: (compare and contrast) 1. Other Investment Assets 2. Alternatives to Fixed Income and EquitiesA decrease in accounts payable constitutes a/an _________ in net working capital and is considered a/an __________ to a project. Select one: a. increase; cash inflow b. increase; cash outflow c. decrease; cash inflow d. decrease; cash outflow e. increase; opportunity costWhich 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 return
