Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Students have asked these similar questions
Which of the following should you focus when assessing the NPV of a project for a MNC?
I. variability of the project's cash flow.
II. correlation of the project's cash flow relative to the prevailing cash flows of the MNC.
III. interest rate
IV. capital structure
A.
II, III
B.
I, III
C.
III, IV
D.
I, II
This method solves for the interest rate that equates the equivalent worth of a project's cash outflows (expenditures) to the equivalent worth of cash inflows
(receipts or savings).
O A. Payback Period
O B. Profitability Index
O C. Rate of Return
O D. MARR
The net present value (NPV) method of investment project analysis assumes that the project's cash flows are reinvested at the
Group of answer choices
Computed internal rate of return
Firm's accounting rate of return
Risk-free interest rate
Discount rate used in the NPV calculation
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- Define each of the following terms: f. Nonnormal cash flow projects; normal cash flow projects; multiple IRRsarrow_forwardThe average accounting rate of return (AAR): Select one: A. is the best method of financially analysing mutually exclusive projects. B. is similar to the return on assets ratio. C. measures net income as a percentage of the sales generated by a project. D. considers the time value of money. E. is the primary methodology used in analyzing independent projects.arrow_forwardWhich of the following projects have conventional cash-flow streams? Select all that are conventional. A) Project A B) Project B C) Project C D) Project Darrow_forward
- How many of the following investment criteria always use all of a project's cash flows in their calculation? • NPV • Payback period • IRR • Profitability index 1 2 3 4arrow_forwardOne must know the discount rate of an investment project to compute its: a. NPV and PI. b. NPV and IRR. c. PI NPV IRR and Payback Period. 4. Payback period and IRR.arrow_forwardWhich of the following is/are true for the average accounting return method of project analysis? I. does not need a cutoff rate II. ignores time value of money II. is based on project's cash flows IV. easily obtainable information for computation Multiple Choice I only I, II, II, and IVarrow_forward
- What refers to the interest rate at which the present work of the cash flow on a project is zero of the interest earned by an investment? Select one: a. Return of investment b. Yield c. Rate of return d. Economic returnarrow_forwardCapital budgeting projects are classified as either independent projects or mutually exclusive projects. [Consider NPV, IRR, Payback Period, and Profitability Index] What is a independent project? What is a mutually exclusive project? Why (or under what circumstance) should either be accepted?arrow_forward" Construct a pro forma income statement for a new project proposal Calculate Operating Cash Flow using the four different approaches Understand the meaning of "sunk cost" and "opportunity cost"arrow_forward
- 1. State the criterion for accepting or rejecting independent projects under each of the following methods. - Profitability index - Discounted payback period - Accounting rate of return - Net present value - Payback period - Internal rate of returnarrow_forwardThe payback period is a non - discounted cash flow technique that measures: a. The time required to recover the initial investment b. The profitability of the project c. The net present value of the project d. The internal rate of return of the projectarrow_forwardExamine 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 falsearrow_forward
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