One of the following methods are not a method to evaluate projects: Return on investment Discounted payback method Return on capital employed O Net present value method O Return on equity

Q: The difference between APV approach, NPV approach and Weighted Average Cost of Capital approach to…

A: Capital budgeting is a technique to evaluate the profitability or value of the project by using…

Q: A project is accepted if, Net present value of the project is positive. IRR is lower than cost of…

A: Net Present Value method is used to ascertain whether the proposal should be selected or rejected…

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: Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs…

A: A sunk cost is the cost that has been incurred as a result of past events and such cost may not be…

Q: Which of the following should NOT be included as a cash flow in initial, operating or terminal cash…

A: There are various different costs associated while taking a capital budgeting decision.

Q: how a failed capital project may shape the future strategy of investment capital.

A: Introduction: Capital projects are nothing but a long term capital intensive initiative aimed at…

Q: Under what conditions can a firm’s weighted average cost of capital be used for assessing new…

A: Weighted average cost of capital is also known as the WACC. This is the rate which must be earned by…

Q: Explain how a net present value (NPV) profile is used to compare capital projects. How does this…

A: NPV also known as net present value is basically the present  value of all the future cash flows.…

Q: Discuss the difficulties in using Net Present Value [NPV] as an investment appraisal method.

A: The net present value method is used by the company for the evaluation of the profitability of…

Q: Explain how a net present value (NPV) profile is used to conpare capital projects. How does this…

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

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: If a net present value analysis for a normal project gives an NPV greater than zero, an internal…

A: NPV greater than 0

Q: Why the payback method is often considered inferior to discounted cash flow in capital investment…

A: Payback period is capital budgeting technique which tells how much time will it take for Ann…

Q: Which of the following statements is (are) true about project appraisal methods: (i) NPV is the…

A: (i) NPV is the best measure for project appraisal even when capital is rationed.   There is no such…

Q: which of the following should not be included in the cash flows for project analysis?…

A: Meaning of the given options: Opportunity cost : It is the benefit foregone from not selecting the…

Q: If net present value for a project is negative, then____. a. IRR is equal to Cost of capital b. IRR…

A: Net present value is the difference between the present value of cashflows discounted at the cost of…

Q: Which of the following is NOTa relevant cash flow and thus should not be reflected in the analysis…

A: Sunk cost is the cost that has been incurred and it would not be recovered in future. It depends on…

Q: Consider the following statement: In a capital rationing problem withdivisible investments, if all…

A: Capital rationing is a technique used in capital budgeting to maximize profitability by restricting…

Q: Payback period, accounting rate of return, net present value, and internal rate of return are common…

A: Decision criteria are the evaluation parameters that influence the selection or rejection of capital…

Q: Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a…

A: Capital investment is defined as an amount, which used to get invested in the corporation for…

Q: Payback period is one of the nondiscounting models used in capital investment decisions.  What are…

A: Payback period refers to the period in which the initial investment is recovered.

Q: Which of the above statements are correct?

A: Net Present Value: It is the present value of the annual cash flows and the initial cost of the…

Q: xplain why sunk costs should be excluded from a capital budgeting study while opportunity costs and…

A: answer are as follows

Q: What are the principal objections to the use of the average rate of return method in evaluating…

A: Average rate of return: Under this method, the average net income is used in evaluating the capital…

Q: Compare capital budgeting decision criteria, Net Present Value (NPV) and Internal Rate of Return…

A: Part (1): Answer: Net present value approach predicts how much a future project would add to the…

Q: hich methods of evaluating a capital investment project ignore the time value of Multiple Choice Net…

A: A Capital Investment project refers to the expenses involved in a project which will eventually help…

Q: Short term investment decisions are also called as Select one: O a. Liquidity decision b. Finance…

A: Investment decisions can be both short term and long term

Q: 1. State the criterion for accepting or rejecting independent projects under each of the following…

A: Capital budgeting is a technique to evaluate long term projects. For evaluating, various methods are…

Q: ith the use of an example, briefly explain the main difference between the ex-ante and the ex-post…

A: Main Difference between ex-ante and the ex-post opportunity cost of capital: Ex-post risk is…

Q: Which of the following is/are true for the average accounting return method of project analysis? I.…

A: Average Accounting Rate of return is used for capital budgeting decision for a project. The Average…

Q: The method that measures a projects return based on present values is the: Internal Rate of Return…

A: The current value of an investment based on the return, which will be received on a predefined…

Q: The cost of capital represents a. the capital outlay required in a project. b. the initial…

A: The Cost of Capital is a representative of cost of the current total capital financing of the…

Q: For a capital investment project to be acceptable, it must generate a rate of return  A) Less than…

A: The correct answer id Option (B).

Q: The weighted average cost of capital is used to determine whether or not a project should be done.…

A: Solution:- Weighted Average Cost of Capital means the minimum return which a firm should earn in…

Q: What is meant by an investment project’s internal rate of return? How is the internal rate of return…

A:

Q: Compare capital budgeting decision criteria, Net Present Value (NPV) and Internal Rateof Return…

A: Part (a): Answer: Net present value approach predicts how much a future project would add to the…

Q: If a capital project has a hurdle rate higher than its internal rate, then its profitability index…

A: Solution Explanation- A hurdle rate is the minimum rate of return required on a project or…

Q: A project is accepted if, I) II) III) Net present value of the project is positive. IRR is lower…

A: Capital budgeting is referred as the process of decision making which is used by companies to…

Q: The ARR has one specific advantage not possessed by the payback period in that it a.considers the…

A: Definition:

Q: State two assumptions when doing capital rationing using a PW analysis for unequal-life projects.

A: Introduction: The planned structure of the revenue’s cost is known as the budget. The projects that…