Q: Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating…
A: Internal rate or return or IRR is the method of capital budgeting which is determined and compared…
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: which of the following statement is true>? 1. return on equity is the ratio of total assets to…
A: Capital budgeting is a way to evaluate profitability of new projects or investment by using various…
Q: The general decision rule in Internal Rate of Return (IRR) is; Group of answer choices Accept…
A: solution concept If the IRR is greater than the cost of capital the project shall be accepted If the…
Q: nternal rate of return For the project shown in the following table, calculate the internal rate…
A: IRR is rate at which net present value of the cash flows will be equal to 0 it is calculated using…
Q: Consider the relationship between a project’s net present value (NPV), its internal rate of return…
A:
Q: We should accept a project if the Net Present Value is positive and the Internal Rate of Return is…
A: Net present value is referred as the difference between the cash inflow's present value and also…
Q: Required (a) Calculate the following values for the investment proposal. (i) Net Present Value; (ii)…
A: Investment Appraisal Techniques: There are several techniques that are used to appraise investment…
Q: Suppose a company uses the NPV method, alongwith risk-adjusted WACCs, to calculate projectNPVs.…
A: Companies find NPV to know the present worth of the project and on that basis, they decide to go for…
Q: Which capital budgeting projects are ?preferred اخترأحد الخیارات a. Higher payback period O b. None…
A: Various decisions are required to be taken by the management before making any decisions related to…
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: 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: pted when profitability index will be greater than one b. All statements are corre
A: Profitability index indicates present value of cash inflows as no. of times of present value of cash…
Q: This calculation determines profitability or growth potential of an investment, expressed as a…
A: Given: The expression of the growth potential of investment is given and to find out the point at…
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: The table below shows the internal rate of return (IRR%) for three investment projects A, B and C…
A: IRR is the rate of discount at which the sum of discounted cash inflows equals the discounted cash…
Q: Which of the statements below describes the correct capital budgeting decision rule? O A. Reject a…
A: Capital Budgeting Capital budgeting refers to different techniques used to evaluate the project.…
Q: Whenever the present value of the project is greater than the initial cash outlay then both the NPV…
A: Net present value is present value of cash inflows less present value of outflows. PI i.e.…
Q: If the internal rate of return (IRR) is less than the cost of capital, then the investment is…
A: False If the internal rate of return (IRR) is less than the cost of capital, then the investment is…
Q: Help question 21
A: Rate of return is a profit of an investment over a specified period of time, expressed as…
Q: True or False: In solving a capital budgeting problem involving investment opportunities that are…
A: In solving a capital budgeting problem involving investment opportunities that are divisible (i.e.,…
Q: (c) Why is net present value considered to be a superior method of evaluating the cash flows from a…
A: The concepts of capital budgeting tools can be used here to answer the questions. There are…
Q: According to the profitability index criterion, a project is acceptable if its profitability index…
A: PI = Present value of future expected cash flows / Initial investment amount in the project.
Q: Which of the following statements is CORRECT? O a. The NPV profile graph for a normal project will…
A: The net present value method is an important technique of capital budgeting and the time value of…
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: Assuming that a project has already been evaluated using the following techniques, the evaluation…
A: There will be no effect on change in residual value of project, if the payback period is less than…
Q: If for a certain project the income of the development is received later than the costs are…
A: If for a certain project the income of the developement is received later than the cost are…
Q: You should accept a project when the ?: net present value is negative. profitability index is…
A: Honor code- Since you have asked multiple questions, we will solve only the first question for you.…
Q: If an investment project has a negative net present value (NPV), which one of the following…
A:
Q: Which of the following statements is CORRECT?
A: Net Present Value (NPV) Net Present Value method is a discounting cash flow technique used in…
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: Which of the following statements Is false with respect to the simple rate of return? Multiple…
A: Formula: Simple rate of return = Average profits / Initial investment
Q: If the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR,…
A: MARR is the minimum return the management requires from a project after adjusting the risks and…
Q: Calculate internal Rate of Return of the project. Should the project be accepted? If reinvestment…
A: Internal rate of return is the rate at which the present value of cash inflows are equal to present…
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: The relationship between NPV and IRR is such that a. both approaches always provide the same ranking…
A: IRR is the required rate of return for the project to have zero Net Present value. Net present…
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: If the net present value of a proposed investment is negative, what is the discount rate used? Less…
A: Net present value (NPV) is the significant present value difference between cash outflows and cash…
Q: The profitability index O will never be greater than 1. O does not take into account the discounted…
A: The profitability index helps to compare the project. It measure the attractiveness of the project.…
Q: The ARR has one specific advantage not possessed by the payback period in that it a.considers the…
A: Definition:
Q: Examine the following statements. (i) Payback period method measure the true profitability of a…
A: Time value of money is a concept that helps in determining the value of future cash flows…
Q: rojects. The ihta Tal fates of return are as folloWS: Internal Rate Project of Return 11 12% 15 13…
A: IRR is the rate at which Present value of cash Inflows is equal to Present Value of cash Outflows.…
project is accepted if,
Step by step
Solved in 3 steps
- A project is accepted if, I) II) III) IV) V) Net present value of the project is positive. IRR is lower than cost of capital. Modified internal rate of return is greater than cost of capital. Profitability index is greater than 1. Payback period is lower than the acceptable payback period. Which of the above statements are correct? A. I, II and III. B. I and IV C. I, III, IV, and V D. All of the aboveA project is accepted if, I) II) III) IV) V) Net present value of the project is positive. IRR is lower than cost of capital. Modified internal rate of return is greater than cost of capital. Profitability index is greater than 1. Payback period is lower than the acceptable payback period. Which of the above statements are correct? А. I, I and II. B. I and IV С. I, II, IV, and V D. All of the above. ------If net present value for a project is negative, then____. a. IRR is equal to Cost of capital b. IRR is greater than Cost of capital c. Benefit Cost Ratio is greater than 1 d. IRR is less than Cost of capital
- Which of the following statement is correct Select one: a. A project is accepted when profitability index will be greater than one b. All statements are correct c. A project is accepted when net present value is greater than zero d. A project is accepted when payback period is less than the other projectwhich of the following statement is true>? 1. return on equity is the ratio of total assets to total net income 2. one must know the discount rate to compute the npv of a project but one can compute the IRR without referring to the discount rate. 3. there will always be one IRR regardless of cash flows 4. one must know the discount rate to compute the IRR of a project but one can compute the NPV without referring to the discount rate 5. payback accounts for time value of moneyThe 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 turnover
- Examine the following statements. (i) Payback period method measure the true profitability of a project. (ii) Capital Rationing and capital budgeting mean the same thing. (iii) Internal Rate of Return and Time Adjusted rate of Return are the same thing. (iv) Rate of Return takes into account the time value of money. A. (i), (ii) and (iii) are correct. B. (ii) and (iii) are correct. C. Only (iii) is correct. D. All (i), (ii), (iii) and (iv) are falseMethods 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 of the following statements is most correct? If a project’s internal rate of return (IRR) exceeds the cost of capital, then the project’s profitability index must be positive. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV. The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the IRR. Group of answer choices Only statements I and II are incorrect. None of the statements above is incorrect. Only statement II is correct. Only statement I is correct. Only statement III is incorrect.
- For a capital investment project to be acceptable, it must generate a rate of return: O Less than the required rate of return. O Equal to or greater than the cost of capital. 4 O Equal to the initial investment. none of the above answers are correct.Which of the following methods does not consider the investment’s profitability? a. ARR b. Payback c. NPV d. IRRWhich of the following statements is false? (You may select more than one answer.)a. The payback period increases as the cost of capital decreases.b. The simple rate of return will be the same for two alternatives that have identicalcash flow patterns even if the pattern of accounting net operating income differsbetween the alternatives.c. The internal rate of return will be higher than the cost of capital for projects thathave positive net present values.d. If two alternatives have the same present value of cash inflows, the alternative thatrequires the higher investment will have the higher project profitability index.