is this statement true or false? and why? Requiring a relative short pay-back period for projects indicates a high-risk avoiding propensity within the organisation
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is this statement true or false? and why?
Requiring a relative short pay-back period for projects indicates a high-risk avoiding propensity within the organisation
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- Is this statement ture or false? Requiring a relative short pay-back period for projects indicates a high risk avoiding propensity within the organisationRequiring a relative short pay-back period for projects indicates a high risk avoiding propensity within the organisationWhich of the following are significant flaws with the Payback Period Method? (Select all that apply) A. Biased against long-term projects B. Uses an arbitrary benchmark C. Very rarely used in practice D. Uses accounting profits rather than cash flows E. Ignores Time Value of Money
- The ARR has one specific advantage not possessed by the payback period in that it a.considers the time value of money. b.measures the value added by a project. c.is always an accurate measure of profitability. d.is more widely accepted by financial managers. e.considers the profitability of a project beyond the payback period.Which of the following statements is correct regarding the payback method? Takes account of differences in size among projects. If a project’s payback is positive, then the project should be accepted because it must have a zero NPV. Ignores cash flows beyond the payback period. Has an objective, market-determined benchmark for making decisions. Directly account for the time value of money.Based solely (only) on the calculated payback periods for each proposal above, which project and why, is management likely to prefer for investment?
- Which of the following is correct? • the shorter a projects payback period, the less desirable the project is normally considered to be by this criterion • one drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period. • if a projects payback is postitive, then the project should be accepted because it must have a positive NPV • the regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem •one drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.Project expenditure management may be overlooked by many IT professionals, which may have a negative influence on the project's completion. Explanation of the budgeting process for a new project. What is a "sunk cost" and how do you define it? Both IT and human sunk costs should be included in the examples. What is it about them that makes it so difficult to ignore them?The board of directors of AMSB are confused between IRR and NPV. Briefly discuss the Internal Rate of Return rule used as an alternative to NPV in project evaluation. What are its strengths and weaknesses when compared to the NPV rule?
- Which are problems of the payback criterion? Check all that apply: It ignores cash flows after the cutoff date. It ignores the time value of money. It doesn't show the value created by a project. It doesn't fully reflect the risk of a project. It uses an arbitrary cutoff value. It is difficult to calculate.What is the value added by the design of the financing package? How does it alter both the return and the risk of the new project? Is it effective at reducing the project’s operating risks?A disadvantage of using the accounting rate of return to evaluate investment alternatives is that Group of answer choices A. It is superior to IRR. B. When net incomes vary from year to year, the ARR will also vary across years, making the project seem desirable in one year and not another. C. It considers the time value of money. D. It is easy to understand and it allows comparison or projects. E. Using ARR has no disadvantages.
