What should be done to apply rate-of-return analysis correctly?

Q: How can the Present-Worth Comparison be done?

A: The present worth method of comparison will diminish the cash flows of every choice to time zero by…

Q: Define actuarial rate of return

A: Definition: Actuarial rate of return is the expected value of losses of an insurance company that…

Q: Define then discuss Value-at-Risk.

A: The stock market is full of new policies and procedures. It get impacted by change in the government…

Q: Differentiate between price risk and reinvestment risk.

A: Price risk is the risk of decline of the price of the investment or an asset after the underlying…

Q: Which are the Methods for Finding Rate of Return?

A: A Rate of Return (ROR) is the gain or loss of an investment over a certain period of time. When the…

Q: WHAT IS THE VALUE OF DISCOUNTED FLOWS

A: As per Time value of money, there are present values as well as future values.

Q: What are the shortcomings of the internal rate of return criterion?

A: Solution- Internal Rate of Return (IRR)-      The Internal Rate of return (IRR) is that the discount…

Q: How to Estimate the  Variable Consideration?

A: Revenue:   It is the income generated by the business over their regular business operations.

Q: Describe the method of Payback Screening?

A: Answer: The company has several investment opportunities. It is vital that you opt for the right…

Q: Briefly explain the fundamental trade-off between risk and return.

A: Fundamental trade-off among risk and return: Higher risk is related with larger chance of advanced…

Q: Present and Explain the theories of the Yield Curve?

A: The yield curve is a curve that shows the relationship between the interest rates and the different…

Q: Should the analyses show the sensitivity of the discounted net present value and other outcomes?

A: The question is based on the concept of a sensitivity analysis, used as a analysis tool in capital…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Why do most of the engineers prefer Rate of Return Analysis to the PW method?

A: Answer: They would be calculating the present worth of cash flows using a net present value…

Q: What is the difference between the possible returns and the expected return?

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: Explain Valuation Fundamentals?

A: Answer: Valuation is nothing but a numerical method in which the true value of an asset or business…

Q: What discount rate is used in a lessor’s NPV analysis?

A: Weighted average cost of capital is used as discount rate in Lessor's NPV analysis.

Q: What is the gradient-series present-worth factor with formula?

A: Step 1: When there is a uniformly change in rate of interest is a gradient series of cash flow. It…

Q: Basic Elements of Risk-Adjusted Returns?

A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…

Q: Define Expected rate of return

A: Introduction: Usually return is a kind of profit that comes from your investment. Example, an amount…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

Q: What is risk return ratio?

A: Any susceptibility a corporation or organization has to factors that might affect profitability or…

Q: Explain the concept of a present-value analysis.

A: Present value (PV) is discounted value of future cash flows to be received at a particular rate of…

Q: Explain four aspects of rate-of-return analysis?

A: The return of return is the return on investment made when the time value cashflows turns to net…

Q: Describe relationship between risk and profitability.

A: Risk and profitability have direct relation. Lower the risk, lower is the return and Higher the…

Q: What makes the risk-adjusted discount rate approach appealing in practical application?

A: Answer: The discount rate may be changed to offset the risk involved in a project in order to…

Q: What formula to use to find Payback Period and NPV? (in Excel)

A: NPV or Net Present Value is the present value of all net cash cashflow on a provided discount rate.…

Q: calculate the internal rate of return

A: Information Provided: Discount rate = 10% Realisable Value = 20%

Q: Explain real rate of return

A: This is the raw rate of return adjusted with inflation. It is used to ascertain the effective return…

Q: What is internal rate of return (IRR) method?

A: NPV shows the excess of PV of all the cash inflows over the initial outlay of the project. It is a…

Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Which investment return, expected or actual, does GAAP allow in the calculation of benefit cost?

A: Benefit cost: When an entity creates a benefit plan setting aside some moneys to meet future…

Q: Calculate the average rate of return, and conclude your results with your comments about the ARR for…

A: Calculation of Accounting Rate of Return (ARR)  Year                             Net Cash Flow 1st…

Q: Explain realized rate of return

A: The return generated by an investment is any asset class is the normalized rate of return. When the…

Q: are return on investment, residual income, and EVA qualitative components?

A: Qualitative components refer to the intangible effect of the events and transactions of business…

Q: Define realized rate of return

A: Return can be defined as the profit or interest earned by the investor on the investment, which…

Q: What are some pros and cons of computing an expected return using a user-specified model versus…

A: Expected Return: As opposed to observed returns that are measured at the end of a given period, the…

Q: Explain an example how to calculate internal rate of return.

A: IRR is the return actually earned by the investor and discount rate is the return which the investor…

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.