Terminal value refers to the sum of all the net cash flows from an investment from the beginning to the end of its useful life. True or False?

Q: How do you calculate Fixed Asset Turnover? What is the Free Cash Flow Ratio? What is the difference…

A: The answers for the questions on accounting ratios are discussed hereunder : Fixed Assets turn over…

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: How is payback calculated with equal net cash inflows?

A: A payback period is the amount of time needed to earn back the cost of an investment. The length of…

Q: Long-term investments include cash that will be used to support current operations. True or False…

A: A long-term investment is an asset presented on the asset side of the balance sheet which represents…

Q: When calculating the present worth of a uniform series using the relationship P = A(P|A, i%,n), the…

A: P equals to A times the factor of P over A and this factor known as the Uniform Series of Present…

Q: How is the value of an asset determined by predicted future cash flows?

A: The Answer

Q: In general, there are several ways to address a particular sequence of cash flows in order to…

A: Cash flow is the net amount that is received and paid from operating, investing, and financing…

Q: Contrast the direct and indirect methods of calculating net cash flow from operating activities.

A: A Cash flow statement is a financial statement that provides the summarised information regarding…

Q: How can we convert any cash flow elements in constant dollars into actual dollars?

A: The cash flow elements are the constant value that can be converted into actual value by adjusted…

Q: How do you evaluate an asset whose value is predicated on future cash flows?

A: Assets are the resources that are generally used for the purpose of revenue generation by the…

Q: Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a…

A: Answer: Rate of return is nothing but the interest rate paid on the outstanding balance of money…

Q: The length of time required for an investment to generate cash flows sufficient to recover its…

A: Net Present Value It is the amount of present value of the cash inflows net of cash outflows. It…

Q: The internal rate of return method assumes that the cash flows over the life of the project are…

A: IRR is the required rate of return for the project to have zero Net Present value.

Q: What is the maturity period required for an investment to qualify under the definitions of a cash…

A: Cash and cash equivalents correspond to just the line item on the balance sheet that lists the value…

Q: Finding the present value of future cash flows is called O A. analytics, tracking and finding the…

A: Capital Budgeting: It is a process a company undertakes for the evaluation of potential investments…

Q: Where is the short term investment shown in the Cash flow statement?

A: A short-term investment: It also known as a temporary investment or marketable security. It is a…

Q: One method for calculating enterprise value includes the present value of which of the following…

A: Enterprise value : total value of the company that shows how much will it cost to buy the firm.

Q: In general, there are several ways to address a particular sequence of cash flows in order to…

A: Present value is sum of present value of cash flows. Future value is sum of future value of cash…

Q: What is the payback period for the machine, assuming all cash flows occur evenly.

A: Payback period is the number of years it would take for the company to recover its capital invested.…

Q: What is the present worth for the investment represented by the given cash flow? Interest is 12%.

A: Present Worthbis the sum of present value of cash flows discounted at the required rate of return.

Q: In future value or present value problems, unless stated otherwise, cash flows are assumed to be…

A: There are two types of cash flows 1. Ordinary annuity 2. Annuity due.…

Q: A project can have as many different internal rates of return as it has: O changes in the sign of…

A: The internal rate of return (IRR) is used to measure the profitability of investments. It is the…

Q: To qualify as cash equivalents, the investment must be:

A: Cash Equivalent: Cash equivalent is highly liquid, short term investments, which could be held by a…

Q: In computing the present value of an investment in equipment, the present value of the residual…

A: Net Present value = Present value of future cash flows + Present value of terminal cash flow -…

Q: In a theoretical sense, the financial value of any asset is the present value of: Select one: A. Its…

A: Net present value represents the difference in the present value of cash inflow and cash outflow.

Q: statements are true of long-term investments? They can be considered cash equivalents.

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: Find the present and future value of the cash flows shown in the figure

A: Present value is the current worth of the annuity at a given interest rate.…

Q: Define the term the cumulative cash flow?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: How can we estimate the profits (more precisely, the cash nows) that the assets will generate during…

A: It is a process of acquiring an approximation or projection or forecast of a firm’s future budgetary…

Q: what will be Net Cash Generated from Operating Activity

A: Cash flows from operating activities is an important element of cash flows statement, which shows…

Q: Which of the following statements best describes the difference between the IRR method and the MIRR…

A: Note: As per the policy, we are supposed to solve one question at a time. Kindly repost the further…

Q: Which of the following are Cash Outflows from Investing?

A: The cash flow statement shows the cash inflow and cash outflow from the operating activities,…

Q: Would the move to a JIT system have a one-time or recurring impact on operating cash flow?

A: JIT inventory system: JIT system is a method adopted by manufacturers with an objective of…

Q: What is the operating cash flow? The capital spending? The change is net working capital? The cash…

A: Capital spending is termed as the amount spent by the firm in the year to purchase or maintain the…

Q: Explain how sunk costs and cannibalisation affect the determination of an investment’s incremental…

A: Introduction : . Simply put, sunk costs refers to the costs that has already been incurred and the…

Q: we can still calculate the IRR on incremental cash flows. True or false? Explain with example?

A: True, IRR can be still computed on incremental cash flow. IRRIt is the technique of discounted cash…

Q: Speculative Balance refers to holding of cash for future investment opportunities.

A: Speculative balance is the method used by the investors of holding money for making future…

Q: The present value of an investment's future cash flows divided by its initial cost is the: O Net…

A: The present value of an investment is calculated by applying the time value of money concept to the…

Q: Operating Cash Flow (OCF) is equal to what?

A: Operating cash flow (OCF) is the cash flow derived from the operating activities. It excludes the…

Q: Illustrate the process of computing the equivalent present worth when all cash flows are given in…

A: The process to compute the equivalent present worth are: Identify the interest rate Identify the…

Q: For a project that has an initial cash outflow followed by cash inflows, the profitability index…

A: Profitability Index The Profitability Index (PI) is the ratio between the present value of cash…

Q: The discounted payback method discounts cash flows at the opportunity cost of capital and then…

A: Cost of capital denotes that cost which a firm is required to pay to finance the amount for the…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.