or example you need money from outside and that's why you are looking for the best options of external fund which need to be evaluated in terms of:
Q: For businesses to continuously sustain in the competitive market, they need to expand their…
A: Capital budgeting concept is used to evaluate the projects and opportunities that the company have…
Q: 7...NPV is the best tool to use for capital budgeting because: a.It uses the IRR to discount cash…
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Q: What is the difference between systematic and unsystematic risk?
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: If a capital budgeting project has a net present value (NPV) equal to zero: a. It will not…
A: Explanation: If the NPV of a project is positive , it will increase the financial value of the firm.…
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Q: What lessons can the fund management industry learn from the Woodford investment scandal?
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Q: Shortening the cash conversion cycle always enhances the shareholder value
A: Note: Hi! Thank you for the question As per the honor code, We’ll answer the first question since…
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A: Option (a): This is a viable option. Finding additional income to manage the shortfall Option (c):…
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Q: What is the Decision-making Criteria in Capital Budgeting?
A: Hi, there, Thanks for posting the question. As per our Q&A honor code, we must answer the first…
Q: Critically think and outline the difficulties that might come up in actual applications of the…
A: The following are the difficulties of capital budgeting: Forecasting the cash flow The time horizon…
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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.
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For example you need money from outside and that's why you are looking for the best options of external fund which need to be evaluated in terms of:
- The Length of the Time
- The Cost
- The Amount of Company Control Lost
- All of The Above
- None of The Above
Step by step
Solved in 2 steps
- Which one is most correct about AFN (additional fund needed) A. AFN > 0 happens when a firm exhausts internal funds to support its operations. B. Everything else remains unchanged, if a firm’s profit margin is expected to go up, then its AFN is more likely to increase as well. C. If everything else remains unchanged, when a firm increases its plowback ratio, its AFN will increase too. D. Companies with relatively high assets-to-sales ratios require a relatively large amount of new assets for any given increase in sales; hence, they must have a greater need for external financing.All parts are under one questions and per your policy can be answered in full. 1. Concepts used in cash flow estimation and risk analysis You can come across different situations in your life where the concepts from capital budgeting will help you in evaluating the situation and making calculated decisions. Consider the following situation: A. The following table contains five definitions or concepts. Identify the term that best corresponds to the concept or definition given. Concept or Definition Term An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project Creates value for a company because it gives the company the right but not the obligation to take future action to increase its cash flows The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value…What are the two best reasons for considering a load fund? A. Lack of good no-load funds and superior market performance. B. Preference for a particular fund manager or a specialized type of fund. C. Superior market performance and preferential tax treatment. D. Tax-free income and superior fund managers. E. No management fees rand a particular fund manager.
- Use the following to answer questions a. – f. a. What is the alpha for Fund B? b. Based on alpha, which fund displays superior performance? c. What is the Sharpe ratio for Fund B? d. Based on the Sharpe ratio, which fund displays superior performance? e. Suppose you are an investment counselor with a new client, Jonsey, and that Funds A and B are the only options available in Jonsey's company sponsored retirement account. Jonsey has no other investments. Which fund would you recommend, and why? f. What additional evidence would make you more confident in your recommendation, that is, more confident that the fund you recommend has the ability to perform in the future? (Hint: The answer has nothing to do with the Treynor Index.)Description Activist funds need to devore more time and resources o invastments compared to most other fund strategies. What sdded risk doss this produce for sctivist funds?View Solution:The figures are for illustrative purposes and are not based on past performance with respect to the fund where your policy is linked. The investment returns used are for illustrative The returns are likely to change during the period. Also, the assumed returns do not represent the upper and lower limits of the actual return that may be realized. Values are calculated assuming the fund is earning 6%*, 8%* and 12%*. It is assumed that mode of payment is ANNUITY DUE.
- the federal fund is more effective than The banker’s acceptance in improving the economic growth. Assess the extent to which you agree with the statement with clarifying which one of these financial instruments you prefer to invest and why.Q.Which of the following led to the shortfall of KRS funds among other reasons? (choose two that apply) A.reduction in participants' contribution B.funds being diverted to support other public projects C.inflation D.using more risky investment vihecles to recover shortfallAssume we are a world that is not frictionless. Indeed, the real world is such a place. In this world, a firm may have difficulty raising funds to fund a positive NPV project because too much of the project's payoff would go to investors other than the investors from whom you are trying to raise the new money. Group of answer choices True False
- Capital investments can be very risky; they are usually long-term decisions that require large sums of cash. Since every department will want capital improvements and cash is usually scarce, it is imperative that management make the right decisions. When determining the minimum required rate of return, what should management consider? What qualitative factors should also go into the decision?Which of the following is not an economic purpose of financial instruments? a Allows transfer of fund from entities with excess funds (investors) to entities who needs funds (issuer) for business purposes (e.g. to pay for tangible assets). b Permit transfer of fund that allows sharing of inherent risk associated with the cash flows coming from tangible asset investment between the issuer and investor. c Allows the money market to be the preferred place for firms to temporarily store excess funds up until such time they are needed again by the organization. d All are economic purposes of financial instruments.Capital Budgeting is evaluated based on cash flows because Select one: a. Cashflows are easy to calculate b. Cash is more important than profit c. None of the options d. Cashflows are suggested by Muscat Securities Market
