What is limitation of Payback period, Net Present Value (NPV) and Internal rate of return (IRR). ii- What is modified IRR?

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: What is market value ratio?

A: Ratio is the relation between two different quantities obtained after dividing one by another.

Q: Which of the following is not an advantage of the average rate of return method? a.includes the…

A: Average rate of return is a method of calculating return on the asset

Q: What is the marginal rate of return? How is it calculated?

A: Answer: Marginal rate of return can be defined as the return obtained or received by means of…

Q: The CAPM model can be used to derive the cost сapital. A. Equity B. Borrowed С. Total D. Unlimited

A: The CAPM (capital assets pricing model) is a technique that helps to derive the cost of capital with…

Q: Explain the differences and similarities between Return on Investment (ROI) and Residual Income (RI)

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: state the limitations of the payback pe

A: Answer : The payback period is the quantity of time needed for cash inflows generated by a project…

Q: What is the internal rate of return?

A: Internal rate of return is the discount rate at which present value of cash inflows equals outflows…

Q: Define each of the following terms: d. Modified internal rate of return (MIRR) method

A: Modified Internal Rate of Return (MIRR): The modified internal rate of return (MIRR) method…

Q: What is the horizon value? Why is it also called the terminal valueor continuing value?

A: Horizon value is the value of the expected dividend that will be received after the horizon date.

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: Which are the two computational schemes for calculating this earned interest yield?

A: The two computational schemes for calculating the earned interest yield are compound interest scheme…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Which of the following correctly orders the investment rules of average accounting return (AR),…

A: Capital budgeting is method of selecting projects among available projects so as to increase value…

Q: Question. What are Operating and non-operating expence?

A: Expenses refer to the outflow of money for the payment of any product or service used in the course…

Q: What is Market Value Added (MVA)?

A: The market value added is the difference of the current value of the company and the equity capital…

Q: is the difference between the gross present value of the benefits of that action and the amount of…

A: Net present value is the difference between the present value of future cash inflows and cash…

Q: Assume benefit is unchanged, how to manipulate  the cost to have positive NPV (net present value)

A: Net Present Value is the difference between PV of all cash inflows (benefits) and PV of all cash…

Q: Which of the following methods consider the time value of money? A. payback and accounting rate of…

A: Time Value of Money The time value of money is the concept that money you have now is worth more…

Q: Give an example assuming that  the Compounding Period equals to Payment Period?

A: The representation on the basis of assumption:

Q: The internal rate of return method provides a rate of return that approximates:   Both the…

A: The internal rate of return shows the estimated rate of growth in a year from the particular…

Q: Define each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR)…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: What is payout period and how is it calculated?

A: Companies employ various methods in the process of selection of the most financially appropriate…

Q: The modified internal rate of return (MMIR) is the discount rate that forces the _____.

A: Explanation: Modified internal rate of return can be better understood from the below formula, where…

Q: a) DEFINE the following terminologies: i. Present value ii. Future value iii. Period iv. Interest…

A: In the given question we need to explain following terminologies: i. Present valueii. Future…

Q: When npv is negative, the discount rate is greater than the actual return on investment. A.…

A: Net present value is the method used in capital budgeting to analyse various investments, projects,…

Q: o you think a person would opt to use the Payback Period Method instead of the Net Present Value or…

A: Given information : . NPV refers to the difference between the sum of the present value of expected…

Q: Compare the mutually exclusive alternatives based on the rate of return?

A: Mutually exclusive projects are the projects out of which one best project is selected due to lack…

Q: what is payback period

A: Capital Budgeting: It is the planning process used to determine whether an organization invests in a…

Q: How can the Calculation of capital-recovery cost (with return)be done?

A: Capital Recovery Cost: When a company purchases or invest in some assets for the business…