An increase in the discount rate will______ O a. Reduce the present value of future cash flows O b. Increase the present value of future cash flows c.Have no effect on net present value Od. Compensate for reduced risk

Q: If cashflows are discounted @   the net present value is     zero.   O a. RATE OF BORROWING…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: Which of the following are correct regarding the frequency of compounding? Choose two.  A) the…

A: The compounding frequency is the number of times interest is paid out or capitalized in the account…

Q: If the sum of the incremental cash flows is negative, what is known about the rate of return on the…

A: Incremental Analysis: The method to measure the viability of different options related to business…

Q: An increase in the discount rate will____ a. Reduce the present value of future cash flows b.…

A: Present Value of Cash Flows = Cash Flow(1+i)n

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: the discount rate that equates the present value of the cash inflows with the present value of the…

A: In capital budgeting decisions calculate net present value is very important.

Q: u are given two choices of investments, Investment A and Investment B. Both investments have the…

A: Introduction: The term present value can be defined as the current value of future set of cash flows…

Q: Question # 4 A Report a Problem O Revisit Choose the best option indicates the current value of…

A: Time value of money: As per this concept, the worth of money, if it is held now, is more than if it…

Q: If you disounted a set of positive real cash flows with a nominal discount rate and inflation were…

A: Justification:Suppose the positive cash flows are discounted with the inflation rate, which is…

Q: How is discounting used in the context of present values and future values? O To reduce a present…

A: Present amount and future amount are two terms which are widely used in time-factor of money where…

Q: Which of the following situation is better for the company? O a. All of these O b. Cash conversion…

A: The cash conversion cycle (CCC) is the days of inventory plus the days of receivable less the days…

Q: 24 The likely effect of discounting nominal cash flows with real interest rates will be to: A make…

A: Net Present value is present value of cash flow minus initial investment

Q: How would a decrease in the interest rate effect the future value of a lump sum, single amount…

A: The correct answer is E. Decrease the future value.

Q: An investment is guaranteed to have a unique value of IRR if which of the following is true? a.…

A: Given: The unique IRR value in the investment.

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: ,Match the following terms with the appropriate definition.Effective yield or interest rateMonetary…

A: Eeffective yield or interest rate is a rate at which the amount invested actually grows over a…

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: Why is it true that a reinvestment rate is implicitly assumed whenever we find thepresent value of a…

A: Discounting is the method of assessing the real value of a potential transaction or collection of…

Q: The NPV method determines how much the present value of cash inflows exceeds the present value of…

A: The amount of difference between the PV (present value) of cash inflows and cash outflows is called…

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: In computing the present value of an investment in equipment, the present value of the residual…

A: Net Present value = Present value of future cash flows + Present value of terminal cash flow -…

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: Which of the following is not a factor in explaining why the present value of a future dollar is…

A: Present value: This is the amount of future value reduced or discounted at a rate of interest till…

Q: 1. Which of the following capital budgeting techniques ignores the time value of money? (a) Payback.…

A: Since you have posted multiple questions, we shall be solving the first one for you. In case you…

Q: appropriate option (i) The rate of return method does not take care of timings of returns. (ii)…

A: Investment appraisal techniques are used to identify whether to invest or not in the project.   Rate…

Q: The average duration of its assets is longer than that of its liabilities.   There is a…

A: Risk is the uncertainty associated with an investment. Higher the risk more is the return and lower…

Q: An investment with a positive total cash flow will always outperform an investment that shows…

A: Positive Cash flows are the annual cash inflow that has been received to the organization on yearly…

Q: How would an increase in the interest rate or a decrease in the number of periods until the payment…

A: Interest rate is defined as an amount of an interest due per period as the proportion of amount,…

Q: When the underlying riskiness of free cash flows (FCF) decreases, the value of the project O…

A: Free cash flow refers to funds of the company which is freely available to be repaid to the…

Q: The rate of return that equates the present value of cash inflows and outflows is the: A. hurdle…

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: A change in money demand or a shift in the money demand curve is caused by a change in * the…

A: the increase demand of money shift the demand curve up.

Q: The discounted payback method considers the time value of money as well as the cash flows after the…

A: Introduction: This question is related to the concept of capital budgeting. It is nothing but an…

Q: a. What is the simple payback period for Alternative 1? b. What is the annual worth of Alternative…

A: As per policy we answer only 3 sub questions in a single question.  Please repost the unanswered…

Q: If cashflows are discounted at____ the net present value is zero   a. Internal rate of return…

A: Capital Budgeting entails long-term planning and monitoring of capital expenditures, as well as a…

Q: Which of the following methods does not adjust for the time value of money: A internal rate of…

A: Capital Budgeting is a financial analysis technique which is used to evaluate the profitability of…

Q: The profitability index O will never be greater than 1. O does not take into account the discounted…

A: The profitability index helps to compare the project. It measure the attractiveness of the project.…

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: The principal of the time value of money is probably the single most important concept in financial…

A: Time value of money refers to decline in value of money with the passage of time due to inflation…

Q: Future worth and annual cash flow analysis often require far less computation than rate of return…

A: Rate of return : Computation of Rate of return involves adopting trial and error method. It involves…

Q: Discounted cash flow capital budgeting techniques do not O take into consideration an unconventional…

A: Discounted cash flow method is a vital capital budgeting technique. It has been explained in the…

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.