S1] Assuming total cashflows are equal for both assets, the asset with more cashflows in the latter years will be valued lower. [S2] As the discount rate increases, the value of the asset increases. a.Only S1 is true. b.Only S2 is true. c.Both S1 and S2 are true. d.Both S1 and S2 are false.
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[S1] Assuming total cashflows are equal for both assets, the asset with more cashflows in the latter years will be valued lower. [S2] As the discount rate increases, the value of the asset increases.
a.Only S1 is true.
b.Only S2 is true.
c.Both S1 and S2 are true.
d.Both S1 and S2 are false.
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- b. Disregard the assumptions in Part a. What is the depreciable basis? What are the annual depreciation expenses? c. Calculate the annual sales revenues and costs (other than depreciation). Why is it important to include inflation when estimating cash flows? d. Calculate annual net operating profit after sales (NOPAT). Then calculate the operating cash flows.1. In discounted cash flows method, the value of investment opportunities is highly dependent on the value that the asset will generate from now until the future. True False 2. Discounted cash flows analysis can be done by determining the present value of the Net Cash Flows of the investment opportunity. True False 3. The amount that should be included in determining the value of the asset is the amount of cash that will be available for the claims of the equity owners and creditors. True False 4. Relevance and reliability of information are important in financial modelling. True False 5. In financial modeling, the usual growth indicators used are inflation, population growth and GNP/GDP growth. True False 6. In financial modelling, you need the inflation to be used as driver for certain operating and capital expenditures. True False 7. The value of a firm's invested capital is Php300 million. Its return on invested capital is 12 percent, and its WACC is 10.5 percent. What is the…All of the following statements regarding NPV are true EXCEPT:a. A positive NPV indicates the present value of the cash flows exceeds the initial investment.b. A negative NPV indicates the present value of the cash flows is less than the initial investment.c. An NPV equal to zero indicates the present value of the cash flows is equal to the initial investment.d. The internal rate of return is the discount rate that causes the initial investment to exceed the present value of the cash flows.
- What is the effect on cash when current noncash operating assets increase? A. Cash increases by the same amount. B. Cash decreases by the same amount. C. Cash decreases by twice as much. D. Cash does not change.The concept of time value of money is that* Note- I am not satisfy give downvote The cash flows that occur earlier are more valuable than cash flows that occur later The cash flows that occur earlier are less valuable than cash flows that occur later The longer the time cash flows are invested, the more valuable they are in the future The future value of cash flows are always higher than the present value of the cash flows2. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called . This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? The interest rate (I) that could be earned by deposited funds The trend between the present and future values of an investment The duration of the deposit (N) The present value (PV) of the amount deposited All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 9%, or 17%. Identify the interest rate that corresponds…
- 13. Consider the following two statements: Statement 1: If nominal cash flows are used in investment appraisal, you must discount to their present values using the real cost of capital Statement 2: The nominal discount rate does not include inflation. Which one of the following combinations (true/false) relating to the above statement is correct? A. Statement 1 : True Statement 2 : True B. Statement 1 : True Statement 2 : False C. Statement 1 : False Statement 2 : False D. Statement 1 : False Statement 2 : TrueThe net present value: is equal to the initial investment when the internal rate of return is equal to the required return. is unaffected by the timing of an investment's cash flows. ignores cash flows that are distant in the future. decreases as the required rate of return increases.Which of the following is true about present value calculations? Other things remaining equal, the present value of a future cash flow decreases if the investment time period increases. Other things remaining equal, the present value of a future cash flow increases if the investment time period increases.
- If cashflows are discounted at____ the net present value is zero a. Internal rate of return O b. Wighted average cost of capital O c. Higher payback period O d. Any payback periodWhich of the following is true of the cash payback period? a.the longer the payback, the longer the estimated life of the asset b.the longer the payback, the sooner the cash spent on the investment is recovered c.the shorter the payback, the less likely the possibility of obsolescence d.All of these answers are correct.1) Which of the following statements about time value of money is not correct? Present value of money is today's value of money. Money grows with interest and time. Value of $1 today is greater than tomorrow. Value of $1 today is less than tomorrow. 2) The present value of a lump sum is: today's value of expected cost savings in the future. today's value of a total future cash flow. today's value of multiple equal payments in the future. today's value of a single payment in the future. 3) ACE Company acquired $500,000 to construct a new warehouse. To obtain this fund, the company issued 3,000 preferred stocks with $100 par value and 8% dividend rate for $300,000 and bonds for $100,000 with 5% interest, and borrowed the rest from its bank with 6% interest rate. The company requires a 3% buffer margin. What is the required rate of return on this project? 7% 12% 10% 13.9% 10.9%
