What four fundamental factors affect required rates of return(i.e., the cost of money)?

Q: What two components make up the cost of money for equity?

A: The cost of utilizing debt capital which a borrower pays is called an interest rate. The cost of…

Q: What is meant by the term time value of money?

A: Time value of money is a concept that says amount today will have more value than amount in future…

Q: i. The net present value ii. The internal rate of return commend the decision to be made

A: Since in the given case the IRR is higher in machine 1 so it is to be selected.   Assumptions: We…

Q: Explain the meaning of the term Time value of money by providing examples

A: Time Value of money means a sum of money right now is worth more than a sum of money received at a…

Q: Define the term internal rate of return?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: a. what is the difference between the discount rate used for net present value and the internal rate…

A: Discount rate used for net present value is rate which investor want to earn from a project . It is…

Q: Write the capitalized-cost equation?

A: Answer: Capitalized cost is well-defined as the present value of an annual cost constant over an…

Q: Nhat is the exact rate of return?

A: The net gain or net loss of an investment over a predetermined time period is referred to as a rate…

Q: Why does the time value of money component arise?

A: Time value of money: The value of amount on hand today is more value than the value of amount…

Q: What is the internal rate of return?

A: Internal rate of return is the discount rate at which present value of cash inflows equals outflows…

Q: What is the meaning of economic value added (EVA)? What does it measure? Why is it important?

A: Economic value added ("EVA") measures a company's financial performance based on the excess wealth…

Q: e average rate of return on investment,

A: Average rate of return of investment = Average net income * 100/(Initial investment-Salvage value)

Q: Explain price/cash flow ratio

A: Answer: Price to cash flow is determined through the division of price per share by cash flow per…

Q: What is the Relationship between the Incremental Cost and the Loan-to-Value Ratio?

A: The question is based on the concept loan to value ratio and its relationship with incremental cost.

Q: What four fundamental factors affect the cost of money?

A: The fundamental factors effecting cost of money: Production opportunities: The chances of production…

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: Which are the two computational schemes for calculating this earned interest yield?

A: The two computational schemes for calculating the earned interest yield are compound interest scheme…

Q: What is the significance of finding the internal rate of return?

A: IRR helps to check the viability of the project. If IRR is more than Kc than Project seems to be…

Q: write three benefits of the knowledge of the time value of money?

A: Time value of money refers to the worth of a money received today is different from a worth of a…

Q: what is meant by the required rate of return

A: The return which is expected to be earned by investing in a security is known as Required Rate of…

Q: Which different terms are used to refer to rate of return?

A: Rate of return is the return that is expected by the investors from the investment made. It is…

Q: What are the three components of the rate of return in order to earn any kind of investment?

A: Following are the three components of the rate of return in order to earn any kind of investment:…

Q: What is payout period and how is it calculated?

A: Companies employ various methods in the process of selection of the most financially appropriate…

Q: What do we mean by internal rate of return (IRR)?

A: Internal rate of return : Internal rate of return is one of the techniques used in capital budgeting…

Q: Which are the several ways of defining the concept of rate of return on investment?

A: Answer: Return on investments is an instrument which can be used to calculate the company’s…

Q: What should be done to find the equivalent present worth of the actual dollar amount?

A: Present value is the concept of discounting future value to bring it to today’s worth.

Q: How can the Calculation of capital-recovery cost (with return)be done?

A: Capital Recovery Cost: When a company purchases or invest in some assets for the business…

Q: What is the fundamental argument behind using an opportunity cost as a discount factor in computing…

A: Opportunity cost: This term is very general and can be used on any normal day to day situation. For…

Q: What are the different terms used to refer to the rate of return?

A: Rate of return is an expected profit on an investment by a investor. It is a rate at which investor…

Q: What are the Capital Costs?

A: Cost:   Cost can be defined as the cash and cash equivalent which is incurred against the products…

Q: define and describe the concept of money multiplier.

A: The Money Multiplier refers to how an initial deposit can lead to a bigger final increase in the…

Q: What is Equilant cash value?

A: Cash and cash equivalents alludes to the detail on the balance sheet that reports the estimation of…

Q: .Calculate (a) net present value, (b) payback period, and (c) internal rate of return.

A: Net Present Value is the excess of present value of cash inflow to that of present value of cash…

Q: What is the difference between a cash basis and an accrual basis measure of performance?

A: Cash Basis :- It is an Accounting Method where Revenue and Expense are identify at the time of…

Q: what is the difference between a required rate of return and an expected rate of return?

A: Rate of return (ROR) is a value at which an investor earns additional amount on invested amount…

Q: /hat is the exact rate of return?

A: MACHINE A         PV FACTOR PRESENTVALUE A 0 FIRST COST -8000   8000…

Q: Why is the cost of capital sometimes referred to as a “hurdle rate”?

A: Cost of capital is the cost of financing a business, investment or a project. Cost of capital is…

Q: How is the payback period is calculated?

A: Payback period is the amount or length of time taken by an investment to recover its cost.

Q: List the various factors that influence the cost of money.

A: Cost of Money:  Cost of Money represents the price paid or used for doing some financial activity…

Q: What is meant by the term payback period?

A: The Payback Period helps to determine the extent of time required to recoup the initial cash outlay…

Q: economic entitiy assumption

A: Accounting Assumptions:                      Accounting professionals are guided by the accounting…

Q: Explain what is meant by the phrase time value of money.

A: Phrase time value of money means a same amount of value of money has more value today than value at…

Q: What is a “required rate of return”? Why is it called the “cost ofmoney” or the “price of money”?

A: The required rate of return can be calculated by two methods, 1) Gordan's growth model  Gordan's…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

Q: What are the four aspects of rate-of-return analysis?

A: Rate of return analysis tells the rate of return which a investment can give. It carefully analyse…