. Distinguish between “the enduring benefit asset test” and the “fixed and circulating capital test” when testing for items which are “capital in nature”. Eplain and elaborate the answer with relevant examples. Thank you.
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Question 3
3. Distinguish between “the enduring benefit asset test” and the “fixed and
circulating capital test” when testing for items which are “capital in nature”.
Eplain and elaborate the answer with relevant examples. Thank you.
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Solved in 2 steps
- The 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 turnoverThe methods of evaluating capital investment proposals can be grouped into two general categories referred to as (1) methods that do not use present values and (2) methods that use present values. True FalseIs it ever appropriate or acceptable to use the payback method of evaluating capital investment decisions?
- Explain briefly what working capital and working capital management are and what they do. Explain the link between current asset policy and liquidity, profit, and risk as well as any other relevant factors. So, which policy do you believe to be the most beneficial?present the capital asset pricing model and discuss how the theoretical model is made operational when going from the theory to the empirical practiceExplain briefly what the terms working capital and working capital management imply. Explain the link between current asset policy and liquidity, profit, and risk as well as any other considerations. Which policy do you believe is the best?
- Explain the meaning of the terms working capital and working capital management in a succinct manner. Explain the link between current asset policy and liquidity, profit, and risk as well as any other relevant information. Which policy, in your opinion, is the best?Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a proposed capital investments? Give an example of each.Which of the following are present value methods of analyzing capital investment proposals? a. internal rate of return and average rate of return b. average rate of return and net present value c. net present value and cash payback d. net present value and internal rate of return
