There are some cases in which the present worth (( PW )) of an investment is positive while its annual worth ((AW )) is negative. Select one: O True O False

Q: The ______________on capital is called Cost of capital Select one: a. Average expected return b.…

A: Return on capital is called as cost of capital. Return for investors on capital invested by them is…

Q: - explain what would you take to compare the worthness of two different fianancial investments? how…

A: Solution- Meaning of economic Investment A  Financial Investment is AN plus or instrument purchased…

Q: Which one of the following statements related to capital gains is correct? Multiple Choice O O O O…

A: The capital gain of an investment is the percentage change in the value of the investment, whether…

Q: For one lump sum FV, the PV of your future liquidity decreases a. as FV increases.b. as t decreases.…

A: Where:PV is the present ValueFV is the future Valuer is the discount ratet is number of years

Q: A) Inflation rate; B) Interest rate; C) Not doing something; 2. People prefer to receive cash: A)…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: What happens, when greater the interest rate other things being equal?

A: NPV(Net Present Value) is used to analyze the profitability of the project. It is the difference…

Q: 6. "Accept investments that have positive net present values" is called the net present value rule.…

A: Net present value (NPV) is the difference between the present value of cash inflows and cash…

Q: An abnormal return occurs:   Only when the actual return is lower than the expected return. Only…

A: A market is said to be efficient, if intrinsic Value of the Security is equal to Market price of the…

Q: Consider an individual facing the prospect of having high income, yí > 0, with probability and low…

A: In the given scenario, we have an individual who faces the possibility of receiving either high…

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: If a company has over capitalization, rate of earning is: Select one: a. equal with the rate of…

A: In case of over capitalization, a company issues more debt and equity as compared to the worth of…

Q: Which of the following is a true statement regarding the future worth of a single investment…

A: Introduction: This question is related to the concept of time value of money. The time value of…

Q: What is the most likely impact on return on equity of an increase in operating expense margin, all…

A: Operating expenses are required to run the business. AN increase in operating expenses reduces the…

Q: If short - term rate - sensitivity asset - liability GAP is negative : a)Decrease in Interest Rate…

A: Several statements have been provided explaining the impact of net interest income in case short -…

Q: a) Let VK(t, T) be the value of a forward contract on an asset with delivery price K, VK(t, T) =…

A: Forward contracts are agreements where one party agrees to buy a commodity at a particular price on…

Q: In conducting a sensitivity analysis, the only parameter that represents a measure of worth is:a.…

A: Sensitivity analysis A financial model which helps in determining how the target variables get…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: The present value of an asset or project is computed to determine which investment must be selected.…

Q: Why is it true that a reinvestment rate is implicitly assumed whenever we find thepresent value of a…

A: Discounting is the method of assessing the real value of a potential transaction or collection of…

Q: What is limitation of Payback period, Net Present Value (NPV) and Internal rate of return (IRR).…

A: i) Payback period: Payback period is the expected time period which is required to recover the cost…

Q: The computations involved in the net present value method of analyzing capital investment proposals…

A: (I) NPV method of analyzing the capital investment is complex and involves more computations than…

Q: True or false  When the net present value is negative, the present value index will be greater than…

A: Net present value: It is the technique used for analyzing investment in long term capital projects.…

Q: According to the Capital Asset Pricing Model, higher investment risk, however it is measured,…

A: The CAPM model is being used for finding the required rates of returns of the security for given…

Q: In Future Worth Analysis, the best alternative when there is a fixed amount of capital to invest is…

A: In future worth analysis, future value of benefits and future value of costs are calculated.

Q: The break-even value calculation is similar to the calculation we use for theinternal rate of…

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

Q: Which of the following alternative assumes that accessibility of capital is infinite? a. Equivalent…

A: The equivalent uniform annual cost can be defined as a capital budgeting concept used to identify…

Q: (T/F) The covariance between two assets ranges between -1.0 and 1.0. (T/F) If two risk) then their…

A: Covariance in finance is a statistical metric used to quantify the degree to which the returns of…

Q: The Cost of capital is the Select one: a. Average expected return on capital b. Highest expected…

A: Businesses and corporations operate on a large scale and require funds every now and then to fuel…

Q: then these assets vary in

A: The constant growth model is a method for valuing the share price of a stock. It calculates the…

Q: apital gain yield (CGY) can be either positive or negative.   Select one: True False

A: Capital gains yield is the percentage increase in the value of an investment. It's calculated by…

Q: lternatives’ useful lives are different, B/C ratio analysis should preferably be based on: Select

A: Introduction : In simple words, the benefit to cost ratio is method to evaluate the effectiveness of…

Q: Why may the net-present-value and internal-rate-ofreturn methods yield different rankings for…

A:

Q: the assets' risk is the asset returns a

A: Step 1   Covariance is a statistical measure of how two assets move concerning each other. It…

Q: 1.) Which is false concerning standard deviation? a. The smaller the standard deviation is the less…

A: Standard deviation measures the deviations of dataset from the expected mean . In finance, standard…

Q: Explain your answer assuming that all variables are constant except for the one mentioned:

A: Capital budgeting is a method used for finding the profitability of investment proposals. This…

Q: The interest rate is the IRR for the mixed investment. True or false?

A: Project Balance (PB) is the amount of investment that is made into a project at any given period of…

Q: Market risk ________.   a. is equal to the rate of return generated by a risk-free asset b.…

A: By simple diversification the total risk can be reduced but can not be totally eliminated. The…

Q: Discuss why it is advisable to invest in a group of financial assets rather than investing in just…

A: An investment is refer as an asset purchased with intention to earn income at some time in future.…

Q: MIRR is considered to be a _______ return since it assumes reinvestment at _______. IRR is…

A: The IRR refers to the internal rate of return that equates the present value of cash inflows and the…

Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: Intrinsic value of any project or any assets is how value being added by asset to value of investors…

Q: appropriate option (i) The rate of return method does not take care of timings of returns. (ii)…

A: Investment appraisal techniques are used to identify whether to invest or not in the project.   Rate…

Q: the returns from two assets have a correlation of 0: Select one: A. Their returns are perfectly…

A: Coefficient of correlation show that how returns are related to each other.

Q: If the rates of return of two assets tends to move in the same direction, they have a negative…

A: Covariance measures the relationship of direction between the returns on two assets or securities.…

Q: Which of the following statements is true?   Multiple Choice   When NPV is 0, the IRR is equal to…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: In a margin account, the interests should be higher than the returns. TRUE OR FALSE?

A: In a margin account, the investor borrows from the broker. So, it is not necessary that the interest…

Q: 4. There is a difference in return on Total Assets and the return on Total Equity. a. What is the…

A: a. The difference between the return on Total Assets and the return on Total Equity is that the…

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.