Why is it true that a reinvestment rate is implicitly assumed whenever we find thepresent value of a future cash flow? Would it be possible to find the PV of a FV withoutspecifying an implicit reinvestment rate?

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 are the two fundamental approaches to Probabilistic Cash Flow Analysis? What are its benefits?

A: The two fundamental approaches to the probabilistic cash flow analysis is shown as follows: Cash…

Q: A conservative approach to reinvesting projected cash flows (the reinvestment assumption) would use…

A: “Hey, since there are multiple different questions posted, we will answer first question. If you…

Q: Which of the following is true about present value calculations? Other things remaining equal, the…

A: The value of any cash flow at immediate current date is called the present value(PV) which is…

Q: What is the difference between unlevered and levered cash flows? What discount rate must be applied…

A: Hi, since you have posted two different questions, we will answer the first one, as per authoring…

Q: Assuming that we are not able to accurately predict cash flows , generally decreased risk is thought…

A: Cash flow at risk at risk tells us how changes in market factors can change the future cash flows.…

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: What is the maturity period required for an investment to qualify under the definitions of a cash…

A: Cash and cash equivalents correspond to just the line item on the balance sheet that lists the value…

Q: Which of the following is the correct definition for present value (PV)?

A: Present value is an important concept in finance which is based on the concept of time value of…

Q: What are the discounted cash flow techniques?

A: Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based…

Q: What condition regarding cash flows would cause more than oneIRR to exist?

A: IRR (Internal Rate of Return) is the interest rate where net present value of a project equals to…

Q: Do we use the term risk to describe an investment project where cash flows are not known in advance…

A: Cash flows refer to the amount of net cash and cash equivalents that flow in and out of the…

Q: A financial analyst is treating a cash flow stream as a perpetuity.  The present value of the…

A: Present Value of Perpetuity: It represents the present worth of the perpetual cash flow stream. It…

Q: Terminal value refers to the sum of all the net cash flows from an investment from the beginning to…

A: Given Statement, Terminal value refers to the sum of all the net cash flows from an investment from…

Q: What cash flows are discounted in the FCFE model, and what is the discount rate?

A: FCFE MODEL: FCFR is known as free cash flow to equity or levered free cash flow, it is a model…

Q: oose the correct option- "This is the rate at which present value of cash inflows are equal to the…

A: Net present value or NPV is excess of present value of cash inflows over present value of cash…

Q: echnical problems associated with the internal rate of return include:

A: IRR (Internal Rate of Return): It is the rate of return that makes the net present value of the…

Q: An increase in the discount rate will______ O a. Reduce the present value of future cash…

A: This question can be solved with the help of 2 examples. Example 1 Initial investment=15000 Discount…

Q: How do you evaluate an asset whose value is dependent on future cash flow expectations

A: The Answer :

Q: c. Use arrows to demonstrate, on the time line in part b, how discounting to find present value can…

A: NPV or Net present value method is a capital budgeting method to compare any two or more similar…

Q: What is the significance of the FCF (Free Cash Flow) in the area of valuation?

A: Cash flows refer to the cash expenditure and cash receipt of the business over a specific time…

Q: Why is the free cash flow valuation model so widely used?

A: With the free cash flow of the firm, administrators will focus on potential businesses that increase…

Q: Free cash flow method gives importance to both anchor and extra value. Do you agree?

A: The question is based on the concept of Financial analysis.

Q: How can we develop the techniques for establishing cash flow equivalence with compound-interest…

A: Answer: To measure the equivalence of the sequence of compound interest factors used to extract the…

Q: What role do incremental cash flows play in a replacement analysis?

A: Answer: Introduction: Replacement analysis is one of the key analyses in the concept of capital…

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: Which of the following are correct regarding the frequency of compounding? Choose two The more…

A: future value=present value×1+rmm×nwhere,m= frequency of compounding higher the frequency higher is…

Q: What is the process of solving a cash flow for an unknown interest rate?

A: Time Value of Money: According to the concept of TVM, the company always interested to know the PV…

Q: Which of the following statements best describes the difference between the IRR method and the MIRR…

A: Note: As per the policy, we are supposed to solve one question at a time. Kindly repost the further…

Q: Discuss the limitations of the traditional discounted cash flow (DCF) analysis

A: Discounted cash flow determines the present value of the future cash flow of the company. It is…

Q: Mathematically, we can determine the rate of return for a given project’s cash flow series by…

A: When Cash Flows are discounted by using Internal Rate of Return for a period of cash flows held.…

Q: To find NPV, it requires

A: NPV or net present value technique is used to determine the present value of all future cash flows.…

Q: What is the difference between Cash Flow Risk and Interest Rate Risk? Please explain it clearly so…

A: Risk is referred to as the possibility of putting oneself or someone in unfortunate…

Q: Calculate the present value and future value of an uneven cash flow stream.

A: A stream of cash flow is uneven  when all the amounts in the series of cash flows are unequal .i.e.,…

Q: Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash…

A: External rate of return is the return rate which is expected to be generated from the project. If…

Q: What are the best startegy for flactuating cash flow?

A: The movement of funds into or out of a business is referred to as cash flow.Inflows are represented…

Q: What are the difficulties and problems when it comes to using the free cash flow valuation model

A: The free cash flow valuation model is one of the most used and one of the most popular valuation…

Q: we can still calculate the IRR on incremental cash flows. True or false? Explain with example?

A: True, IRR can be still computed on incremental cash flow. IRRIt is the technique of discounted cash…

Q: “The greater the discount rate, the greater the present value of a future cash flow.” True or false?…

A: Present Value: The value of today's amount expected to be paid or received in the future at a…

Q: Which figure of merit provides an interest rate at which the present value of the future cash flows…

A: IRR It is a rate at which the amount of investment equals to PV of the future CF. It is a…

Q: Why are the net present value and internal rate of return considered discounted cash flow methods?

A: Net present value is the comparison between the net cash inflows received from a future investment…

Q: . How does one determine the value of any assetwhose value is based on expected future cash flows?

A: If there is an order of anticipated upcoming cash flows, cash flow technique is one of the finest…

Q: Which of the following statements correctly describe how the present value of a future expected cash…

A: The present value of future cash flows is the value which is derived by discounting the future cash…

Q: Why do the payback period analysis fail to recognize the difference between the present and future…

A: Pay-Back (PB) Period is time in which Initial outlay related to proposed investment is completely…

Q: Lowering the discount rate on a cash flow will its present value.

A: Discount Rate: It is the rate at which the cash flows over the period are discounted.

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.