Explain return on invested capital (ROIC)

Q: Which capital investment methods require the use of a present value table?

A: Net Present Value: It is a measure of profitability for a project used primarily in capital…

Q: Explain how the cost of capital serves as a screening tool when using (a) the net present value…

A: Cost of capital:   Cost of capital is the required return necessary to make a capital budgeting…

Q: Define risk-adjusted cost of capital (r)

A: Risk adjusted cost of capital is the measure of returns of a project relative to the risks of a…

Q: explain the concept of cost of capital and how would you determine the WACC of the firm.

A: Cost of capital refers to the cost incurred in availing the source of finance. Cost of capital is…

Q: Apply the procedure to find the true IRR, or return on invested capital, of the mixed investment?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: The following are investment criteria: net present value, payback, profitability index, average…

A: The question is based on the concept of capital budgeting techniques , to ascertain the true worth…

Q: Why does a weighted average cost of capital suggest an optimal capital structure?

A:

Q: Find 'return on invested capital'.

A: Ratio analysis is a method of analyzing a company's liquidity, profitability, and operational…

Q: Explain the graph in the context of working capital management.

A: Working Capital Management is a business strategy in which businesses design their strategies to…

Q: e average rate of return on investment,

A: Average rate of return of investment = Average net income * 100/(Initial investment-Salvage value)

Q: oncept of capital maintenan -defines the level of profitabil

A: Capital maintenance: It is an accounting principle that says that a business should recognize its…

Q: Describe the capital asset pricing model and explain the role of beta as a risk measurement tool.

A: Answer

Q: Discuss the advantages and disadvantages of using (a) payback, (b) net present value and (c )…

A: Payback Period: It refers to the period in which the project's or investment's initial cost is…

Q: Interpret your investment decisions made according to the rules mentioned

A: 0 1 2 3 4 5 1 COGS   -11000 -11000 -11000 -11000   2 OPENING STOCK 0 0 0 0…

Q: Define weighted average cost of capital (WACC)

A: Weighted average cost of capital (WACC) It is the sum an organization is relied upon to pay to all…

Q: Define capital intensity ratio

A: Formula to compute capital intensity ratio:

Q: What is net operating working capital (NOWC)?

A: Working Capital The working capital (wc) is a financial term that represents the operating liquidity…

Q: Derivation of capital asset pricing model

A: The Capital Asset Pricing Model (CAPM) relates the returns on individual assets or entire portfolios…

Q: Define Capital Market Line (CML)

A: Introduction: Risk refers to the degree of volatility involved in the anticipated return on…

Q: Discuss the pros and cons of the accounting rate of return as an investment criterion.

A: Definition: Average rate of return method: The average rate of return is the amount of income that…

Q: What is the equation for the Capital Asset Pricing Model (CAPM)? Explain the meaning of each…

A: The capital asset pricing model is given by the below equation E(Ri) = Rf + B(E(Rm) - Rf), where…

Q: Define asymmetric information theory (capital structure)

A: Capital structure plays an important role for any organization & it would be generally in the…

Q: Explain the risk-profitability tradeoff in working capital management.

A: Working capital management involves ensuring that the company is able to meet its short-term…

Q: Define the following terms, using graphs or equations to illustrate youranswers wherever feasible:…

A: c) The model indicating the relation of the market risk and the required stock returns is known as…

Q: Explain the relationship between the weighted average cost of capital (WACC), the maximization of…

A: Optimal capital structure of the firm explains the relationship between the weighted average cost of…

Q: What is the return on invested capital (RIC)?

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: Discuss your views on the real impact of COVID-19 on firm’s cost of capital

A: Cost of Capital is defined as the required return, which used to be very important for preparing the…

Q: Define paid-in capital

A: Definition: Stockholders’ equity: Stockholders’ equity is referred to as the claims of the…

Q: Define the terms “book-value capital structure,” “market-value capital structure,” and“target…

A: Book value capital structure refers to the relative proportion of common stock, preferred stock,…

Q: What ROI will equate the PV of Inflows and the PV of outflows? a. Internal rate of return (IRR) b.…

A: Option b is incorrect because cost of capital means the cost that is incurred by the organization on…

Q: Capital; capital structure; optimal capital structure

A: Capital: Ownership of assets of financial nature is termed as capital. Capital can be used for…

Q: Define signaling theory (capital structure)

A: Capital structure: Capital structure is defined as mixture or proportion of all kinds of capital…

Q: Realize how capital investment analysis plays a strategic function

A: This question explains about capital investment analysis plays a strategic function.

Q: What is the Return on Invested Capital?

A: Return on invested capital is calculated or determined to know the efficiency of the company on…

Q: capital

A: Capital budgeting is estimating the level of the firm's profitability on its future projects. Future…

Q: Describe value, growth and momentum investing. Highlight the differences between them.

A: Value, growth, and momentum investing are the three investment strategies that aim to pave the way…

Q: What is the payback method of analyzing capital investments?

A: Formula: Payback period = Initial Investment / annual cash inflows

Q: Define the term, the return on invested capital (RIC)?

A: All investments are made keeping focus on the expected returns that can be generated from it. The…

Q: 3. Explain the relationship between the weighted average cost of capital (WACC), the maximization of…

A: The question is based on the concept of Weighted average cost of capital (WACC), maximization of…

Q: Briefly discuss capital asset price model from the standpoint of investors and managers.

A: CAPM from standpoint of managers : Capital asset pricing model is of high value for financial…

Q: Discuss two limitations of using the weighted average cost of capital when making investment…

A: The corporation's cost of capital, calculated using both debt and equity, is known as the Weighted…

Q: Which of the following is a present value method of analyzing capital investment proposals? Uaverage…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…