Discuss Positive side effects and negative side effects cash flows? Provide examples. Explain the stand-alone principle. Provide examples

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: What are the two fundamental approaches to Probabilistic Cash Flow Analysis? What are its benefits?

A: The two fundamental approaches to the probabilistic cash flow analysis is shown as follows: Cash…

Q: How is payback calculated with equal net cash inflows?

A: A payback period is the amount of time needed to earn back the cost of an investment. The length of…

Q: What is free cash flow (FCF)?

A: Free cash flow (FCF): It speaks to money a firm creates after accounting for cash outflows to back…

Q: Which is more important from a finance perspective-net income or operating cash flow? What is the…

A: Net income is calculated in the income statement whereas and operating cash flows are calculated in…

Q: Cashflow vs. net income: Which strategy is more appropriate?

A: instruction: The direct and indirect routes to a cash flow statement are both found there.

Q: what are usefulness and weakness of discounted cash flow method?

A: Discounted Cashflow Method is the Method in which we compare Initial Project cost with expected…

Q: Define cash flow hedges.

A: Derivatives:   Derivative is a product whose value is derived from underlying assets called base.…

Q: Drw a Cash flow diagram for comparing cost-only?

A: Initial costs  The occurrence of cost at the time of design and the construction of the project.…

Q: Cite the advantages brought about by an effective cash flow forecasting

A: The method of making an estimation or prediction of any company's projected financial situation is…

Q: All of the followings are True when the net present value method is used to choose between two…

A: Net present value is the excess of present value of cash flows over cash outflows or initial…

Q: Given the following, what is free cash flow?

A: The free cash flow is calculated by deducting the capital expenditure from the cash flow from…

Q: How much is the expected cash flow disregarding other simulations?

A: Capital budgeting is a method used for finding the profitability of investment proposals. It…

Q: Describe similarities between the indirect and the direct method of te statement of cash flow.…

A: Cash flow Statement-It is a statement that shows inflows and outflows of the cash and cash…

Q: When using the NPV method for a particular investment decision, if the present value of all cash…

A: When NPV method is used the investment is measured on three scenarios Positive NPV Where the…

Q: What is free cash flow, and how is it calculated?

A: Free cash flow:Free cash flow is defined as an evaluation of financial performance of a company. It…

Q: The formula to compute free cash flow is

A: The formula to compute free cash flow is here:

Q: Why is the free cash flow valuation model so widely used?

A: With the free cash flow of the firm, administrators will focus on potential businesses that increase…

Q: Define DCF (discounted cash flow) analysis

A: Discounting cashflow

Q: What role do incremental cash flows play in a replacement analysis?

A: Answer: Introduction: Replacement analysis is one of the key analyses in the concept of capital…

Q: Describe the Investment-Credit Decision—A Cash Flow Perspective.

A: Answer: Every lender and borrower shall have their own conditions based on their needs and wishes.…

Q: What is irregular cash flow stream?

A: Cash Flow has a flow concept. There can either be cash inflow or cash outflow. Generally, for…

Q: Discuss the limitations of the traditional discounted cash flow (DCF) analysis

A: Discounted cash flow determines the present value of the future cash flow of the company. It is…

Q: Describe the process of estimating Risky Cash Flows?

A: Process of estimating Risky Cash flows.

Q: What should a firm’s goal be regarding the cash conversion cycle,holding other things constant?…

A: The cash conversion cycle refers to the number of days between paying for crude materials or…

Q: What cash flows are associated with Descartes’ rule of signs and Norstrom’s criterion?

A: Cash flows series can be of two types i.e. non-conventional and conventional cash flow series. Non…

Q: What are three concerns the financial manager should be aware of when analyzing a balance sheet, &…

A: There are financial statements prepared by the company for the purpose of considering information…

Q: why discounted cash flow methods are preferred to the more traditional techniques of payback and…

A: Before knowing the reason of preference for the use of any method, let us see the basic description…

Q: Calculate the present value and future value of an uneven cash flow stream.

A: A stream of cash flow is uneven  when all the amounts in the series of cash flows are unequal .i.e.,…

Q: What does a negative Cash Flow from Assets ( CFFA) indicate?

A: Cash flows are an integral part of any business. To keep operating, businesses require positive cash…

Q: Give an example of the Cash-Flow Approach?

A: A cash flow hedge is defined as the transaction done to offset the risks from the variability of the…

Q: we can still calculate the IRR on incremental cash flows. True or false? Explain with example?

A: True, IRR can be still computed on incremental cash flow. IRRIt is the technique of discounted cash…

Q: Discuss the two variables that must be considered whether you are using the present value of cash…

A: The discounted cash flow approach and the relative valuation approach are both used to value any…

Q: Discuss why the present value of cash flows and the relative valuation ratios valuation approaches…

A: Valuation of entity is done in two methods as: Discounting expected inflows from entity in upcoming…

Q: Briefly explain the concept of discounted-cash-flow analysis. What are the two common methods of…

A:

Q: Why is it more reasonable to assume, as the NPV rule does, that the intermediate cash flows are…

A: Before investing in new assets or projects, profitability is evaluated by using various methods like…

Q: What is the CAPM beta? How is it different from Cash Flow beta? Provide intuitive explanation and…

A: Beta is an important component of the CAPM- capital asset pricing model, which calculates the cost…

Q: How is payback calculated with unequal net cash inflows?

A:

Q: Define Free cash flow

A: Cash flow statement Cash flow statement helps businesses to know the exact cash inflows and outflows…

Q: What are the strenghts and weaknesses of the Discounted Cash Flow methods

A: Cash flow is the movement of money from a particular investment. Discounted cash flows mean…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.