Under what circumstances the cross over rate will be an important point in capital budgeting. Can it create a problem in project selection? Explain.

Q: How can we use the internal rate of return to evaluate whether we should pursue a specific project?…

A: It is important for the investors to evaluate the project in all aspects before making any…

Q: What is the typical discount rate used with the Net Present Value (NPV) when project risk is the…

A: a) The rate of return the shareholders expected to get, or the rate at which the company borrows,…

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: Please explain why the net present value (NPV) method is preferred over the payback method when…

A: NPV method is preferred over payback method because of following reasons 1. NPV method shows project…

Q: sion in capital budgeting?

A: A decision related to the investment in the long-term assets is known as the capital budgeting…

Q: be included in the capital budgeting decision because it is:

A: Given the cost is used for development and time and money is expended

Q: Should capital budgeting decisions be made solely on the basis ofa project’s NPV, with no regard to…

A: Net present value is a method of capital budgeting. In this technique, the current estimation of…

Q: In a capital budgeting study, explain why sunk costs should not be included, but opportunity costs…

A:

Q: “Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? E xplain.

A: “Only quantitative outcomes are relevant in capital budgeting analyses”. This statement is…

Q: importance of the Technique

A: Capital budgeting refers to the process undertaken by the business for evaluating the projects or…

Q: Critically think and outline the difficulties that might come up in actual applications of the…

A: The following are the difficulties of capital budgeting: Forecasting the cash flow The time horizon…

Q: Why is risk incorporated into capital budgeting and how is it incorporated into the process of…

A: Capital budgeting is the process of evaluating different investment projects that require capital…

Q: Outline the limitations of the capital asset pricing model as a method for obtaining discount rates…

A: Capital Asset Pricing Model (CAPM) measures the expected return on an investment at particular…

Q: “Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? Explain.

A: Capital budgeting- It is also known as investment appraisal. It is the process which every business…

Q: If NPV is conceptually the best procedure for capital budgeting, why do you think multiple measures…

A: Capital Budgeting Techniques helps to decide the investment project that should be selected.

Q: xplain why sunk costs should be excluded from a capital budgeting study while opportunity costs and…

A: answer are as follows

Q: What does effective capital budgeting require?

A: Capital budgeting is the process of evaluating large-scale investments or expenditures. The…

Q: Do you think capital budgeting is important? Justify

A: Capital budgeting is a process of investing into capital expenditure. Capital expenditure is an…

Q: What is a capital budgeting technique that generates decision rules and associated metrics for…

A: The capital budgeting technique help to evaluate the acceptibility and rejection of a particular…

Q: Discuss which step in the capital budgeting process you think would be the most challenging. Give…

A: Capital budgeting process is referred to as the formal or official process of the firm, which used…

Q: Why might DCF techniques not lead to proper capital budgeting decisions?

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: What is capital budgeting? Compare the advantages and disadvantages of various capital budgeting…

A: Capital budgeting is indeed the process by which a company evaluates potential large projects or…

Q: WHAT ARE THE PROBLEMS WITH IRR APPROACH TO CAPITAL BUDGETING?

A: IRR internal rate of return is very common method of capital budgeting decisions making.

Q: When and under what conditions the cross over rate will be used will be an essential consideration…

A: Introduction: The process through which the corporation decides on the project investments that will…

Q: What are the advantages of the PI method of capital budgeting?

A: The ratio that evaluates the profitability of the investment is term as the profitability index…

Q: f NPV is conceptually the best procedure for capital budgeting, why do you think multiple measures…

A: Capital budgeting refers to the investment of funds in capital expenditure. Capital expenditure is a…

Q: What is the difference between capital budgeting screening decisions and capital budgeting…

A: Definition:   Capital budgeting: It refers to the long-term investment decisions that have been…

Q: What are the critical steps involved in the capital budgeting process?

A: Capital budgeting process : Capital budgeting is the process of choosing ideal investment project…

Q: What types of projects require the least detailed and the most detailed analyses in the capital…

A: Capital budgeting is a corporate method that determines future large ventures or investments.…

Q: Why is the NPV the primary capital budgeting decision criterion?

A: NPV( net present value) is a method to determine the current value of all the cash flows which are…

Q: What are real options, and why are they important to capital budgeting?

A: A real option is a valuable right to make or else abandon some choice that is available to 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: ic   net  present   value  model of capital budgeting  deal with the problem of project risk?  What…

A: Introduction : In simple words, net present value refers to the amount that is calculated by…

Q: What is the major criticism of the payback and simple rate of return methods of making capital…

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

Q: What is the major short coming of using the payback period as the only criterion in making capital…

A: ANSWER    the major short coming of using the payback period as the only criterion in making capital…

Q: Which is one of the most important parts of the capital budgeting process? Explain with an example?

A: The Decision-making phase is the most vital part of the capital budgeting process and it is…

Q: NPV and IRR are two of the most important decision criteria in capital budgeting.  Will NPV and IRR…

A: Net Present Value Net present value is the difference between the present value of the cash inflows…

Q: Explain the decision-making criteria in Capital Budgeting with the satiable example.

A: Capital budgeting is the process that a business uses to determine whether proposed fixed asset…

Q: a. What is the typical discount rate used with the Net Present Value (NPV) when project risk is the…

A: a) The rate of return the stockholders anticipate to get, or the rate at which the firm borrows,…

Q: What factors should you keep in our mind as a financial manager when selecting methods of capital…

A: Capital budgeting is the method through which financial managers are able to make decisions related…

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.