Q: Depreciation is a non-cash charge, it doesn’t affect the results of cash budget analysis. True…
A: Depreciation is charged as reduction or decrease in value of fixed assets over the period of time.…
Q: Hello, I having trouble getting the right answer for Option B "net present value," and the…
A: Internal rate of return refers to the discount rate at which the net present value of the investment…
Q: One problem with free cash flow method is gives too much weight to countinung value. Do you agree
A: Answer :- YES
Q: The discounted payback method is better than the regular payback method because The time value of…
A: Payback period is the amount of time required to recover initial investment. Regular payback period…
Q: O Cash price less down payment equals
A: Cash Price minus Down payment = Amount Financed
Q: With a decrease in time preference, the supply of loanable funds will increase. Select one: True…
A: Loanable funds includes all forms of credit, such as loans, bonds, or savings deposits. There is an…
Q: [S1] An advantage of the discounted cashflow valuation method is that it is less exposed to market…
A: Discounted cash flow method of valuation of investment is one of the methods of valuation of an…
Q: What is the principal objection to the payback method?
A: The Payback period is one of the traditional or non-discounting techniques of Capital budgeting. It…
Q: explain why payback period is not a preferred method
A: The payback period is a period in which the total costs of an investment are recovered through cash…
Q: Differences between the ERR and the IRR include the following: a. The ERR will yield a unique…
A: From the various given statements, we have to find the difference between the internal rate of…
Q: Which of the following statements is False regarding the payback period method: DA Use as a tool in…
A: Statement -D is false.As payback period method is Non- discounting cash flow criteria…
Q: One theoretical disadvantage of both payback methods-compared to the net present value method is…
A: Regular payback period is simple the time required to required to recover initial amount of…
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: As the discount rate increases A. present value factors decrease B. Present value factors remain…
A: Solution: As the discount rate increases "present value factors decrease".
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: Which ones identify the disadvantages of the payback rule? A. Very simple and easy to apply. B.…
A: Solution: Payback period is one of the decision making criteria in capital budgeting. It measures…
Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…
A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…
Q: The modified internal rate of return (MMIR) is the discount rate that forces the _____.
A: Explanation: Modified internal rate of return can be better understood from the below formula, where…
Q: When npv is negative, the discount rate is greater than the actual return on investment. A.…
A: Net present value is the method used in capital budgeting to analyse various investments, projects,…
Q: The only time you change the original cash flow diagram in problems involving uniform series cash…
A: Cash flow diagrams are defined as business tools that are used to represent the cash flows that is…
Q: O Payback does not consider the time value of money
A: Capital projects refer to a project which is helpful in maintaining and improving the asset of the…
Q: Explain the payback period model and its two significant weaknesses. How does the discounted payback…
A: The payback period one of the method of capital budgeting. It shows the required time taken to…
Q: If the calculated NPV is negative, then which of the following must be true? O No answer text…
A:
Q: To find the present value of an uneven series of cash flows, you must find the PVs of the individual…
A: The present value is the value of a series of cash flows in the current time period computed on the…
Q: The following is a disadvantage of ARR investment appraisal method (select one): A. multiple or…
A: Accounting rate of return is a method that is used for evaluating the investment proposal. It is…
Q: What are some criticisms of the payback method?
A: Payback Period: Payback period is the period in which the project recovers its initial cost of the…
Q: One of the benefit of the pay back period is that it focuses on the timing of the project`s benefits…
A: Payback period is a time taken to recover initial investment
Q: Put–Call Parity - A put and a call have the same maturity and strike price. If they have the same…
A: Explanation : When share Put and Call having the same maturity & also Strike price is same then…
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: An advantage of the internal rate of return method is that a.it considers the time value of money.…
A: Capital budgeting is the process of selecting and choosing best alternatives among the available…
Q: disadvantages
A: Meaning of Discounted Cashflow Analysis Discounted cash flow (DCF) is a valuation method used to…
Q: Why Pay back period method is not as effective as NPV?
A: Payback method It doesn't consider account inflation as well as the cost of capital. It ignores…
Q: 9. Which of the following statements is CORRECT? Group of answer choices One defect of the IRR…
A: The correct statement is "One defect of the IRR method is that it assumes that the cash flows to be…
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: To find the present value of an uneven series of cash flows, you must find the PVs of the individual…
A: The present value refers to that value which is the current value and by which the future value of…
Q: One of the advantages of Internal Rate of Return is: a. It gives the closest rate of return O b.…
A: Internal rate of return is the rate where net present value of the investment is Nil.
Q: Which one of the following is the advantage of payback period method? a. Does not consider time…
A: Payback period = invitial investment / annual cashflow
Q: Why do some people say that MIRR should stand for Meaningless Internal Rate of Return?
A: Question is based on the concept of Business Finance
Q: Which of following statements is CORRECT? The MIRR and NPV decision criteria can never conflict One…
A: MIRR : MIRR is one of the capital budgeting techniques, which helps the business organization to…
Q: Which of the following is a disadvantage of the IRR project evaluation method? Select one: a. It…
A: IRR is the rate at which NPV is zero.
Q: This can occur when a selection among mutually exclusive alternatives is based wrongly on…
A: Answer- Ranking errors can occur when a selection among mutually exclusive alternatives is based…
Q: Cash conversion cycle can be reduced by reducing the payables deferral period which will slow down…
A: The total number of days that a company takes to convert its resources into cash is known as the…
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- The discounted payback method is better than the regular payback method because The time value of money is considered. The rate of return is allowed to vary. The concept is based on irregular time periods. None of the above.The payback period method has been criticized for not taking the time value of money intoaccount. Could this limitation be overcome? If so, would this method then be preferable to theNPV method?Which of the following statements is CORRECT? a. The future value of an annuity table is most useful in the short-cut calculation of the future value of uneven cash flows. b. The formula or equation for the calculation of the present value can be used only in even cash flows that are paid or received at regular time intervals and subject to a constant discount rate. c. The present value of an annuity table is most useful in the short-cut calculation of the present value of uneven cash flows. d. The formula or equation for the calculation of the future value can be used also in regular annuity and subject to a fluctuating rate of return.
- Which of the following is a disadvantage of the average rate of return method? a. fails to consider the time value of money b. includes the amount of income earned over the entire life of the proposal c. emphasizes accounting income d. difficult to useExplain the payback period model and its two significant weaknesses. How does the discounted payback period model addresses one of the problems?The discounted payback method considers the time value of money as well as the cash flows after the payback.Group of answer choices A.false B. true
- Internal rate of return (IRR) and net presetn value (NPV): -Generally arrive at the same accept/reject decisions-are less sophisticated than payback period-cannot make use of the same cash flows-can be subsitured for by the payback periodWhich of the following statements about payback (payback period) is most correct? a. Payback is a measure of time breakeven. b. Payback is a rough measure of risk. c. Payback is a rough measure of liquidity. d. Both a. and b. are correct. e. Answers a., b., and c. are all correct.One of the benefit of the pay back period is that it focuses on the timing of the project`s benefits and costs, even though it does not adjust the cash flows for the time value of money Select one: True False
- An advantage of the internal rate of return method is that a.it considers the time value of money. b.it can rank proposals of equal lives. c.it considers the cash flows of the investment. d.All of these choices are correct.Which of the following is not an advantage of the average rate of return method? a.includes the amount of income earned over the entire life of the proposal b.takes into consideration the time value of money c.emphasizes accounting income d.easy to usesimple payback period will be less than the payback period considering compounded interest rate (for the same amount and same period): True or False