When using the NPV method for a particular investsment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then ________. Group of answer choices A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low

Q: When considering the discount rate to use for discounting cash flows of an entire company, we can…

A: The discount rate is the loan cost used to decide the current worth of future incomes in a…

Q: An increase in the discount rate will____ a. Reduce the present value of future cash flows b.…

A: Present Value of Cash Flows = Cash Flow(1+i)n

Q: Assuming that we are not able to accurately predict cash flows , generally decreased risk is thought…

A: Cash flow at risk at risk tells us how changes in market factors can change the future cash flows.…

Q: the discount rate that equates the present value of the cash inflows with the present value of the…

A: In capital budgeting decisions calculate net present value is very important.

Q: u are given two choices of investments, Investment A and Investment B. Both investments have the…

A: Introduction: The term present value can be defined as the current value of future set of cash flows…

Q: When comparing NPV and IRR, which is incorrect? * . With NPV, the discount rate can be adjusted to…

A: Net present value is the difference between the present value of cash inflows and cash outflows.…

Q: Which of the following statements is most correct? O (a) When calculating NPV for cash flows of…

A: NPV:- A set of cash flows occurring at different dates is given a net present value (NPV) or net…

Q: Which of the following statements is correct? The NPV method assumes that cash flows will be…

A: Solution:- Net Present Value (NPV) means the net of the present value of cash inflows and initial…

Q: Discounting an investment’s cash flows using the internal rate of return will result in which of the…

A: Introduction: The internal rate of return (IRR) is a research and consulting metric used to assess…

Q: Explain what is meant by the internal rate of return of an investment and discuss its relationship…

A: Honor code Since you have asked multiple questions, we will solve the first question for you. If you…

Q: Suppose an investment has conventional cash flows with positive NPv. How would it impact your…

A: NPV is the net present value of a project. When the net present value of a project is positive in…

Q: All of the followings are True when the net present value method is used to choose between two…

A: Net present value is the excess of present value of cash flows over cash outflows or initial…

Q: Differences between the ERR and the IRR include the following: a. The ERR will yield a unique…

A: From the various given statements, we have to find the difference between the internal rate of…

Q: An investment is guaranteed to have a unique value of IRR if which of the following is true? a.…

A: Given: The unique IRR value in the investment.

Q: What can you say about the investment's projected rate of return if the present value of the…

A: In this we have to determine interest rate is below or above the given interest rate.

Q: The net present value: is equal to the initial investment when the internal rate of return is equal…

A: The net present value is determined by, The Net present value (NPV) is defined as the difference…

Q: All of the following statements regarding NPV are true EXCEPT: a. A positive NPV indicates the…

A: Net Present Value : It is the net of present value of cash inflow and present value of outflow.…

Q: t? A If internal rate of return (IRR) is greater than the cost of capital then reject B If IRR is…

A: Introduction : In simple words, discounted cash flow analysis refers to the valuation technique…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: The present value of an asset or project is computed to determine which investment must be selected.…

Q: echnical problems associated with the internal rate of return include:

A: IRR (Internal Rate of Return): It is the rate of return that makes the net present value of the…

Q: Why is it true that a reinvestment rate is implicitly assumed whenever we find thepresent value of a…

A: Discounting is the method of assessing the real value of a potential transaction or collection of…

Q: When using the NPV method for a particular investment decision, if the present value of all cash…

A: When NPV method is used the investment is measured on three scenarios Positive NPV Where the…

Q: An increase in the discount rate will______ O a. Reduce the present value of future cash…

A: This question can be solved with the help of 2 examples. Example 1 Initial investment=15000 Discount…

Q: c. Use arrows to demonstrate, on the time line in part b, how discounting to find present value can…

A: NPV or Net present value method is a capital budgeting method to compare any two or more similar…

Q: Risk in capital budgeting implies that the decision maker knows _ of the cash flows. Fill in the…

A: In capital budgeting the decision maker will have an idea after analysing risks about the cash flows…

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: internal rate of return (IRR): Group of answer choices will always lead to the same decision as…

A: IRR is a method used for investment appraisal. It is the rate of return at which the present value…

Q: Explain your answer assuming that all variables are constant except for the one mentioned:

A: Capital budgeting is a method used for finding the profitability of investment proposals. This…

Q: (c) Why is net present value considered to be a superior method of evaluating the cash flows from a…

A: The concepts of capital budgeting tools can be used here to answer the questions. There are…

Q: Suppose an investment has conventional cash flows with positive NPV. how would it impact your…

A: Conventional cash flow is a cash flow in which an investment or project has an initial cash outflow…

Q: Discuss the limitations of the traditional discounted cash flow (DCF) analysis

A: Discounted cash flow determines the present value of the future cash flow of the company. It is…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: Intrinsic value of any project or any assets is how value being added by asset to value of investors…

Q: A disadvantage of using the payback period to compare investment alternatives is that it a. Ignores…

A: Investment decision: Investment decision can be referred to as capital budgeting. It involves…

Q: Incremental cash flow is calculated as (cash flowB− cash flowA), where B represents the alternative…

A: Incremental cash flows are the cash flows that are left after meeting initial cash requirements as…

Q: In the discounted cashflow method, the discount rate is used for the following reasons EXCEPT a. it…

A: Discounted Cashflow Method: The discounted cash flow (DCF) approach is a method of valuation that is…

Q: Which of the following statements is true?   Multiple Choice   When NPV is 0, the IRR is equal to…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: Which is least likely correct about security valuation? a. The calculated or determined value…

A: Security valuation is technique o knowing the value of securities.

Q: Explain the problems posed for the use of the IRR when it is necessary (i) to choose between two…

A: IRR or Internal rate of return is the annualized rate of return for an project with expected cash…

Q: Which of the following statements related to the internal rate of return (IRR) are correct? I. The…

A: All Four options are correct.

Q: You plan to analyze the value of a potential investment by calculating the sum of the present values…

A: The present value of cash flows is computed by discounting the future cash flows with the relative…

Q: The rate of return that equates the present value of cash inflows and outflows is the: A. hurdle…

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: Certainty Equivalent Cash flow (CEQ) is obtained through converting the expected  cash flows by a…

A: Capital budgeting decisions are major investment decisions needs to be taken by the business. Under…

Q: Which of following statements is CORRECT? The MIRR and NPV decision criteria can never conflict One…

A: MIRR : MIRR is one of the capital budgeting techniques, which helps the business organization to…

Q: Which of the following statements correctly describe how the present value of a future expected cash…

A: The present value of future cash flows is the value which is derived by discounting the future cash…

Q: When comparing NPV and IRR, which is incorrect? With NPV, the discount rate can be adjusted to take…

A: Net present value is the difference between the present value of cash inflows and cash outflows.…

Q: The ____ of an investment is the period of time for the ____ to equal the initial cash outlay.   a.…

A: The payback period refers to the amount of time it takes to recover the cost of an investment.…

Q: Which of the following is NOT a valuation model that is based on discounting cash flows? Select one:…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

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.