Which of the following should NOT be included as a cash flow in initial, operating or terminal cash flows of a capital budgeting project? A.Opportunity Costs B.Incremental Revenues C.Sunk costs D.Relevant revenues E. Incremental Costs

Q: The relationship between project cash flows, taxes and inflation.

A: Cash flows is the flow of money in or out from the business. There are two types of cash flows which…

Q: Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs…

A: A sunk cost is the cost that has been incurred as a result of past events and such cost may not be…

Q: What are the advantages of using the NPV method of assessing capital budgeting projects over the Pay…

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

Q: The importance of cash flow management when evaluating proposals for capital expenditure?

A: All investments in capital assets are expected to earn a return, which is evaluated by comparing the…

Q: Why are discounted cash flow methods of making capital budgeting decisions superior to othermethods?

A:

Q: Explain how the concept of risk can be incorporated into the capital budgeting process.

A: risk is a probability of happening or non-happening chances of an investment that, an outcome or…

Q: Identify two simplifying assumptions associated with discounted cash flow methods of making capital…

A: Capital budgeting: Capital budgeting is a process by which the management can plan and evaluate the…

Q: The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of:…

A: Time value of money:   It is a concept that states the money worth we have at present will be more…

Q: Which of the following is NOTa relevant cash flow and thus should not be reflected in the analysis…

A: Sunk cost is the cost that has been incurred and it would not be recovered in future. It depends on…

Q: Distinguish among beta (or market) risk, within-firm (or corporate) risk, and stand-alonerisk for a…

A: Beta is an estimation of a security or portfolio’s instability or systematic risk as appeared…

Q: importance of the Technique

A: Capital budgeting refers to the process undertaken by the business for evaluating the projects or…

Q: cash

A: The term cash flow refers to the  net of cash after considering the inflows & outflows. Inflows…

Q: Should capital budgeting decisions be made solely on the basis of project’s NPV?

A: Net present value is the method of capital budgeting, under this method the present value of future…

Q: Operating cash flows rather than accounting income are listed in Table 12.1. Why do we focus on cash…

A: Answer: The main reason why we are focusing on cash flows is only because cash can be invested or…

Q: Why is risk incorporated into capital budgeting and how is it incorporated into the process of…

A: Capital budgeting is the process of evaluating different investment projects that require capital…

Q: Outline the limitations of the capital asset pricing model as a method for obtaining discount rates…

A: Capital Asset Pricing Model (CAPM) measures the expected return on an investment at particular…

Q: xplain why sunk costs should be excluded from a capital budgeting study while opportunity costs and…

A: answer are as follows

Q: Explain for which types of projects, a detailed capital budgeting analysis is required and why?

A: Capital budgeting is a long-term investment decision process which helps to get good returns in the…

Q: Explain how a gain or loss on disposal is handled in a capital-budgeting analysis.

A: Capital budgeting: Capital budgeting is a process by which the management can plan and evaluate the…

Q: Explain what the techniques of Strategic Capital Budgeting are

A: Strategic capital Budgeting plays a significant role in evaluating long term projects that…

Q: What is a capital budgeting technique that generates decision rules and associated metrics for…

A: The capital budgeting technique help to evaluate the acceptibility and rejection of a particular…

Q: What is meant by the term payback period? How is this criterion sometimes used in capital budgeting?

A:

Q: Should financing costs be included as an incremental cash flow in capital budgeting analysis?…

A: Financing ost will be reflective of all such cost which are incurred due to financing of a…

Q: Which of the following is the most reliable method for making capital budgeting decisions? a. ARR…

A:

Q: WHAT ARE THE PROBLEMS WITH IRR APPROACH TO CAPITAL BUDGETING?

A: IRR internal rate of return is very common method of capital budgeting decisions making.

Q: ions used in the

A: Before making any investment the analysis of the future outcomes becomes necessary. Capital…

Q: 6f

A: Opportunity cost: It reflects the profits that a person, financial specialist, or company loses in…

Q: What are the critical steps involved in the capital budgeting process?

A: Capital budgeting process : Capital budgeting is the process of choosing ideal investment project…

Q: Why is the NPV the primary capital budgeting decision criterion?

A: NPV( net present value) is a method to determine the current value of all the cash flows which are…

Q: Identify “relevant” cash flows that should and should not be included in a capital budgeting…

A: Before investing in new projects or assets, profitability of the project is evaluated by using…

Q: ic   net  present   value  model of capital budgeting  deal with the problem of project risk?  What…

A: Introduction : In simple words, net present value refers to the amount that is calculated by…

Q: Which is one of the most important parts of the capital budgeting process? Explain with an example?

A: The Decision-making phase is the most vital part of the capital budgeting process and it is…

Q: Should capital budgeting decisions be made solely on the basis of a project’s NPV?Explain.

A: Capital budgeting decisions are based on various factors in which NPV is one of the factors which…

Q: Explain the decision-making criteria in Capital Budgeting with the satiable example.

A: Capital budgeting is the process that a business uses to determine whether proposed fixed asset…

Q: Managers use capital budgeting techniques to make which of the following two types of capital…

A: As per the guidelines, only one question is allowed to be solved so I am answering the first…

Q: Which of the following is the most reliable method for making capital budgeting decisions? ARR…

A: NPV method is the answer.

Q: In the evaluation of cash flows in a capital budgeting decision , which of the following must be…

A: The following are considered for the evaluation of cash flows in a capital budgeting decision.…

Q: BIP can be used in capital budgeting decisions to determine whether to invest a certain amount. O…

A: Capital Budgeting :- It is an process of deciding or choosing best amoung different alternatives…

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.