Should the project be accepted or rejected?

Q: Is the project viable or not? Suggest reasons

A: The viability of a project is examined in a feasibility study to ascertain the likelihood of…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: How does the Broader Diversification Reduce Risk?

A: Portfolio is a pool of different investments/assets. Investors can categorize the risks in two…

Q: Why is there conflict between the NPV and IRR criteria between projects Y and Z? Which is typically…

A: In this question, we are required to determine the reason for conflict between IRR and NPV. Also, we…

Q: Describe the Project selection rules under the IRR criterion?

A: IRR (Internal rate of return) is one of capital budgeting techniques which is used to evaluate the…

Q: Is a method of screening out in certain situations an unacceptable investment alternative?

A: Capital budgeting is the technique that is used in business to determine the best investment…

Q: What is the goal of conservatism?

A: Definition:

Q: What outcomes are possible with speculative risk?​

A: Speculative risk is a form of risk in which the outcome is unknown and there is a chance of both…

Q: What are the unique risks of land development projects from the developer’s and lender’s points of…

A: The risks of land development projects from developer’s point of view: Planning risk: The ability…

Q: Which decision is called the abandonment decision?

A: Answer: The decisions relating to the company that provides flexibility to discontinue the project…

Q: What factors verify that the project is marginally acceptable?

A: Capital budgeting decisions are generally taken for long-term purposes that are irrevocable.…

Q: FMS option

A: Options are called financial derivatives that provide buyers with the right, but not the obligation,…

Q: IS a outsource?

A: Outsourcing is the process of hiring a third party to perform the company's services that are…

Q: Describe the methods of determining the Project Risk?

A: Project risk is an uncertain event or circumstance that affects at any rate one objective of a task,…

Q: How are IFRS and the codification related? Do you feel that IFRS adoption could happen without…

A: The question is related to International Financial Reporting Standards (IFRS) and Codification. The…

Q: What is the definition of "FMS option"?

A: Stock Option:A stock option (additionally referred to as a fairness option), offers an investor the…

Q: What is risk, and how does it affect decisions about investment?

A: Risk and return are related to each other while making investment.

Q: what does it mean if the NPV and IRR are both positive, should the company invest on the project or…

A: Net Present value refers to the present value of future cash flow, which means cash flows generated…

Q: How can break-even analysis be helpful in evaluating project risk

A: Break even analysis helps us in determining that level of sales at which the company is at a point…

Q: What is the nature of research and development costs?

A:

Q: An individual wants to have 1,000,000 AED in 10 years. Suppose she will pay no taxes at the end of…

A: To calculate the present value , the future value need to be discounted using the discount rate.…

Q: Which alternative is considered to be riskier, all else equal? and why?

A: Debt and Equity mix or only equity are the forms of capital structure which is chosen by the entity…

Q: How do you think a compromise between the major stakeholders could be reached?

A: Stakeholders is a wider term. Stakeholders means those parties who have interest in a company's…

Q: Why sunk cost should not be considered when evaluating a project?

A: Sunk cost is a cost that has incurred , and which cannot be recovered.

Q: In which situation are the project lives unequal?

A: Answer: A business will face a situation where multiple capital projects display a positive net…

Q: Determine the theoretical ex-rights price?

A: The determination of the theoretical ex-rights price is generally done when stocks are issued and…

Q: When making decisions, will there be problems with the IRR method for choosing which project to push…

A: Capital budgeting techniques include: Payback Period Discounted Payment Period Net Present Value…

Q: What are the limitations of TCE approach to the make or buy decision?

A: TCE Approach is Transaction Cost Economics Theory. It means an activity should be performed within…

Q: What is commercial risk?

A: In financial terms, risk is defined as the possibility that the real profits from an outcome or…

Q: When does a project deny the merit consideration?

A: Project is assessed on the basis of various important considerations such as profitability, social…

Q: Which is the most important breakeven in the analysis of a project?

A: Projects could be analyzed by using net present value (NPV) method. In this method, projects are…

Q: What two conditions can lead to conflicts between the NPV and the IRR when evaluatingmutually…

A: NPV : NPV or net present value is defined as the difference between present value of cash inflows…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.