Why isn’t accounting net income used in the net present value method of making capitalbudgeting decisions?

Q: Why is capital cost allowance used instead of depreciation expense in capital budgeting?

A: Capital cost allowance: is an annual deduction which can be claimed on depreciable asset while…

Q: How changes in capital structure effect WACC?

A: The two types of borrowing available in capital markets are equity and debt. The concept of capital…

Q: Why is the distinction between paid-in capital andretained earnings important?

A:

Q: Are debtors calculated at selling price or finished goods price for net working capital? and why?

A: Net working capital means the difference between the current assets and current liabilities. Current…

Q: What is the notion of capitalization effects and how does it work

A: The notion of capitalization effects and how does it work will be explained:

Q: how to arrive at earnings before paying the interest cost under the current capital structure

A: From Company data you go income statement of company

Q: How to Make Reporting for Capital Position According to PSAK?

A: Financial reporting:Financial reporting can be defined as the financial information of organization…

Q: Explain how the cost of capital serves as a screening tool when using the net present value method.

A: Definition: Net present value method: The net present value method is the method that is used to…

Q: hat does it mean by analyse profitability of invested capital

A: Introduction : In simple words, invested capital refers to the sum of all the funds that a business…

Q: What exactly is the analytic hierarchy process (AHP) and how can it be used to the process of making…

A: ANALYTIC HIERARCHY PROCESS: It is the method for managing and identifying, organizing the complex…

Q: What is issued capital? How does it differ from Authorized capital?

A: Company needs the funds for business purpose. Hence, Company raise capital.

Q: Describe the process of making Capital-Expenditure Decisions?

A: Capital Expenditure Decisions include those decisions which require deciding on the purchase of…

Q: In computing the cost of capital, do we use the historical costs of existing debt and equity or the…

A: WACC is cost incurred by entity to finance its capital structure. It is sum of weighted individual…

Q: How do the availability and cost of outside capital affect dividendpolicy?

A: Dividends are the profits that are paid to the stockholders. The company always tries to achieve a…

Q: In the case of the net present value technique, explain how the cost of capital is used as a…

A: The question tells about the net present value technique and  how the cost of capital is used as a…

Q: What information does the payback convey that is absent from the other capitalbudgeting decision…

A: Payback period method is a traditional method used in capital budgeting decisions which is used to…

Q: What is the significance of capital accounts?

A: Capital Account: An account which records the trading of foreign assets and liabilities during the…

Q: MM Approach of Capital Structure is similar to which other approach Net Income Approach O Gross…

A: The Modigliani and Miller Approach (MM Approach) of the capital structure states that the value of…

Q: What are the common internal controls in place for capital expenditure cycle? with explanations

A: Internal control is an important part of every organization. It helps in maintaining the efficiency…

Q: Explain how the cost of capital may be used as a screening tool when applying the net present value…

A: Net present value: Net present value is a the increment return from an investment after covering the…

Q: What is the difference between authorized capital, issued capital and additional paid in capital?

A: The assets and cash of a firm are referred to as capital. Capital might be cash, machinery,…

Q: financial gain

A: ANSWER- ECONOMIST  The Economist online offers authoritative insight and opinion on international…

Q: Why should the capital expenditures be capitalized?

A: Capital Expenditures:   Capital expenditures are those which provide future economic benefits by…

Q: When does the Capital expenditures occur?

A: Capital expenditure is the money spent by business on acquiring fixed assets like land, building…

Q: Can the net cash flows be viewed as before-tax values or aftertax values for which tax effects have…

A: Cash flow after taxes (CFAT) investigates the capacity of an organization to deliver income from its…

Q: What does Capital Recovery (Ownership) Cost?

A: Capital recovery cost It is an equivalent annual amount each year an asset must earn to recover…

Q: What is the difference between capital expenditure and revenue expenditure?

A: Capital Expenditure: Expenses Incurred and the corresponding benefit out of such expenses lasts for…

Q: What is meant by capital structure and how is it different from financial structure?

A: Capital structure of the company can be defined as the combination of various sources such as debt,…

Q: REQUIRED: ANSWER THE FOLLOWING QUESTIONS IN POINT FORM • What is the difference between book value…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: How is each type of risk used in the capitalbudgeting process?

A: Risks in capital budgeting is nothing but uncertainty about the future profitability of a project.…

Q: how to decide and choose between investments if capital is rationed? Assess the timing effect of…

A: Here asked for multi question we will solve for first question for you.  If you need additional…

Q: Why does the interest in the original investment or the capital cost is included as a cost in the…

A: The annual worth method is the method in which all the cash flows are equally distributed across the…

Q: What are some ways in which the capital structure decisions canaffect the value of operations?

A: Capital structure decisions are based on the cost of capital procured from various sources. The form…

Q: What is a capital expenditure versus a revenue expenditure?

A:

Q: Why isn’t accounting net income used in the net present value and internal rate of return methods of…

A:

Q: Explain, using practical example how Capital expenditure should be capitalized?

A: Capital expenditure can be defined as an expense made for the purchase of a long-term physical or…

Q: What are the Capital gains and capital losses?

A: Investments:   Companies invest in stocks and bonds of other companies or governmental entity to…

Q: When calculating WACC, what capital is excluded and why?

A: when the company has multiple sources of finance in the company, then it is required to calculate…

Q: How does accounting help the capital allocation process?

A: Capital allocation: A capital allocation is the process of allocating total capital amount into…