The overall rate of return needs to be checked for multiple mutually exclusive projects when only costs are provided. O True O False

Q: c) d) Which project(s) would you select if you used the IRR methods. Why? If these were mutually…

A: Answer C: Project B should be selected as it has a higher IRR.

Q: Determine the internal rate of return of a project?

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: How can we Evaluate a Single Project: For a simple investment?

A: Following are the ways in which a single project can be evaluated: Present worth: Present worth is…

Q: True or False If several independent projects are considered, the one(s) with the highest PIs…

A: If several independent projects are considered, the one(s) with the highest PIs should be chosen...…

Q: Provide an example of a “good” externality, that is, one that increases a project’strue NPV.

A: The question is based on the concept of externality in project management. Externality is define as…

Q: Sunk costs should always be included when considering the cost of an activity. True or false, and…

A: Sunk cost are those cost which are already incurred by the business , But business cannot recovered…

Q: The benefit cost ratio must be greater than or equal to ______for the project to be economically…

A: The Benefit-Cost ratio is found by Dividing the Net Present Value of Benefits of the Project by the…

Q: Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure.…

A: IRR internal rate of return is where net present value is zero.

Q: Management would consider a project when IRR is greater than the RRR

A: IRR - Internal rate of return is used to analyze how much an investment or a project will be…

Q: The MARR used for a project’s acceptance or rejection is set relative to what cost?

A: MARR is a discount return which is the lowest rate of return that must be accepted in the project.

Q: What is the NPV decision rule for discretionary mutually exclusive projects? A. Accept the project…

A: There are two types of projects: Independent projects. Mutually exclusive projects. Independent…

Q: A project’s IRR is the discount rate that causes the PV of the inflows to equal the project’s cost.…

A: The given statement is true.

Q: The potential benefit that is given up when one alternative is selected over another is called O a.…

A: Cost accounting is one of the important branch of accounting, under which all type of costs and…

Q: What factors verify that the project is marginally acceptable?

A: Capital budgeting decisions are generally taken for long-term purposes that are irrevocable.…

Q: How can the working-capital requirements significantly reduce a project's profitability or rate of…

A: More risky investments would bring about more returns. In this manner, an organization with high…

Q: Many times, project decision makers do not rely solely on financialhurdles, such as return on…

A: Intangible factors are those factors which can not be seen touched or felt. These factors are really…

Q: Why is the original cost estimate corrected based on buyout data?

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: “Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of…

A: Indirect cost pool refers to the accumulated cost that jointly benefits two or more costs…

Q: For the reader's advantage, provide a cost-benefit analysis of the project. How can the value of a…

A: An analysis is a systematic procedure used by businesses to determine which decisions to make and…

Q: When projects have scale differences, only the Net Present Value method will rank the projects…

A: The method used to find out the present value of future cash inflows and outflows is called as Net…

Q: The term stands for technical, economic, legal, operational and schedules feasibility. Discuss these…

A:

Q: How will you choose between two mutually exclusive projects which do differs in terms of their…

A: An investment appraisal is a capital budgeting technique that helps to analyze a proposed project's…

Q: It is good to compute first the additional benefits that a project can give and the additional cost…

A: Meaning of the given options:: a) Law of supply and demand- The law of demand states that when price…

Q: What is an internal rate of return and what advantages and disadvantages are accrued by using it to…

A: IRR or Internal rate of return measures the rate of return of projected cash inflows generated by…

Q: Under what circumstances will you prefer profitability index to NPV as project evaluation…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: When faced with a set of independent projects, one should select (choose the best answer) O all…

A: When accepting individual projects, Project with  Positive NPV or IRR greater than hurdle rate or…

Q: Distinguish between the following concepts a. Sunk costs and Opportunity Costs

A: Solution:- a)Distinguish between Sunk costs and Opportunity Costs as follows:- Sunk costs:- A sunk…

Q: a. Compute the net present value of each project. Which project should be adopted based on the net…

A: Net present value is the result arrived at by subtracting the total outflows in year 0 (or initial…

Q: f the projects are mutually exclusive, highest payback period project will accept normally. a. True…

A: Payback period is the time it takes to recover the cost of an investment

Q: The analysis of the effect that a single variable has on the net present value of a project is…

A: Sensitivity analysis is also known as what if analysis. It is a tool used to analyze how different…

Q: Use the information above and help the management in choosing the most desirable Project using…

A: Investment appraisal techniques such as NPV, PI, payback period(PBP) and discounted PBP are used for…

Q: Critically discuss the Expected Net Present Value method (ENPV) and explain why it may be more…

A: Expected  Net Present Value method is a method of capital budgeting. Under this method it is…

Q: In calculating the Net Present Value, the project would be acceptable if the outcome was: Group of…

A: The net present value is calculated as the difference of present value of cash inflows minus present…

Q: A situation in which taking one investment prevents the taking of another is(are) called: O Net…

A: In capital budgeting decisions, there are three types investment decision of projects (a) dependent…

Q: For any given project completion time less than the normal time, a ___________ of possibilities…

A: Cost is the price at which a good or service can be purchased.

Q: Why is it important to make the distinction between company required rate of return (WACC) and…

A: WACC is the weighted average rate of return. It is the average cost of funding for a company.…

Q: What type of projects does the Payback method favor?

A: Payback method: It implies to a method of evaluating investment projects by computing the time, it…

Q: When faced with a set of independent projects, one should select (choose the best answer) O all…

A: When there are set of projects, selection of a project will be based on any of the following options…

Q: profitability

A: Profitability index is defined as the method of determining the attractiveness of an investment. The…

Q: Dis benefits are the future costs of a project that are paid out of its benefits Select one: True…

A: Dis benefits are the estimated costs that can occur in the future while performing the project.…

Q: Can the IRR measure also be used to compare projects with unequal lives as long as we can establish…

A: Yes, the IRR measure can also be used when the project has unequal lives but a common study period…

Q: Why do we need to use the incremental analysis when comparing mutually exclusive projects?

A: Mutually exclusive projects are the projects which compete with each other. In a company which has…

Q: .When using the NPV method the decision making rationale includes the following (select all that…

A: NPV : it the difference between PV of cash inflows and PV of cash outflows.

Q: Describe one advantage and one disadvantage of the NPV methodology of evaluating proposed projects

A: The net present value of the NPV technique is that it considers the essential thought that a future…

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.