Answered: A project’s IRR is the discount rate…

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A project’s IRR is the discount rate that causes the PV of the inflows to equal the project’s cost. True or False

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 16MCQ: Using IRR, a project is rejected if the IRR a. is equal to the required rate of return. b. is less...

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Concept explainers

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.

Question

A project’s IRR is the discount rate that causes the PV of the inflows to equal the project’s cost.

True or False

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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Using IRR, a project is rejected if the IRR a. is equal to the required rate of return. b. is less than the required rate of return. c. is greater than the cost of capital. d. is greater than the required rate of return. e. produces an NPV equal to zero.
A MIRR is considered as Present value of Costs is equal to Present value of project minus cost Future value of Terminal value Present value of Terminal value Internal rate of return
Which of the following statements is correct? A. If the NPV of a project is greater than 0, its PI will equal 0. B. If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0. C. If the PI of a project is less than 1, its NPV should be less than 0. D. None
A project's return is referred to as the yield promised by an im·cstment project over its useful life?
If the net present value of a project is positive, the project earns a return that is Group of answer choices - equal to the required rate or return - greater than the required rate of return - equal to the accounting rate of return - greater than the accounting rate of return
Projects with _____are preferred. O a. Lower payback period. O b. Normal payback period. O c. Higher payback period. O d. Any payback period.
Calculating Net Present Value of a project is an application of which technique: a. SWOT Analysis.b. Future value.c. Cost Benefit Analysis. d. Discounting.e. Compounding.
What is a capital budgeting technique that generates decision rules and associated metrics for choosing projects, based on the implicit, expected geometric average of a project's rate of return?
The formula for ROI is simply the gain from the project minus cost of the project divided by the cost of project. True or False?
How the regular payback periods and discounted payback periods for projects are calculated, after calculating NPV, IRR and MIRR
Calculate internal Rate of Return of the project. Should the project be accepted? If reinvestment rate assumption of IRR is changed to cost of capital 11% , what should the modified rate of return ( MIRR)?
It is good to compute first the additional benefits that a project can give and the additional cost incurred by implementing a project. This concept talks about a. Law of Supply and Demand b. Marginal Cost Benefit Analysis c. Time Value of Money d. Financial Ratios