Which of the following statement is   true?   O a. Sunk cost is not relevant in   capital budgeting decision   O b.   Capital budgeting decisions   are based on past       OC. Capital budgeting decisions are short term in nature   O d.   Capital Budgeting decisions   can be changed anytime

Q: The IRR method and NPV method can differ in ranking of capital budgeting decisions. What causes…

A: The NPV is the difference between the present value of the cash inflow and the initial investment…

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: Is capital budgeting decisions can be reversed

A: In capital budgeting we review different projects to determine their financial feasibility and…

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: Option values are extinguished when they areexercised. How does this influence capital budgeting…

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

Q: Should capital budgeting decisions be made solely on the basis ofa project’s NPV, with no regard to…

A: Net present value is a method of capital budgeting. In this technique, the current estimation of…

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: In a capital budgeting study, explain why sunk costs should not be included, but opportunity costs…

A:

Q: Which important function of management needs huge capital and have a long-term effect Select one: a.…

A: Management is an act or process of performing planning, organizing, staffing, directing, and…

Q: “Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? E xplain.

A: “Only quantitative outcomes are relevant in capital budgeting analyses”. This statement is…

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: Critically think and outline the difficulties that might come up in actual applications of the…

A: The following are the difficulties of capital budgeting: Forecasting the cash flow The time horizon…

Q: Which of the statements below describes the correct capital budgeting decision rule? O A. Reject a…

A: Capital Budgeting Capital budgeting refers to different techniques used to evaluate the project.…

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: The goal of the capital budgeting decisions is to select capital projects that will decrease the…

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

Q: The capital budgeting is associated with Select one: a. None of the options b. Short term assets c.…

A: Capital budgeting is the tool used to analyze the long term investment. There are different…

Q: Real options in capital budgeting can be classified in all of the following ways except: investment…

A: Real option used to provide the right to the management of the firm, but there will no obligation…

Q: Why are interest charges not deducted when a project’s cash flows are calculated for use in a…

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

Q: True or False: In solving a capital budgeting problem involving investment opportunities that are…

A: In solving a capital budgeting problem involving investment opportunities that are divisible (i.e.,…

Q: What is capital budgeting? Compare the advantages and disadvantages of various capital budgeting…

A: Capital budgeting is indeed the process by which a company evaluates potential large projects or…

Q: Short term investment decisions are also called as Select one: O a. Liquidity decision b. Finance…

A: Investment decisions can be both short term and long term

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: In capital budgeting, the Payback Method suffers from the problem of: No consideration to sunk costs…

A: Traditional methods: Payback period: This method is used to calculate how many years a project will…

Q: What is the difference between scenario analysis and sensitivity analysis? How might you use each…

A: Capital budgeting is the process of selection of best project which will increase the value of the…

Q: What is the difference between capital budgeting screening decisions and capital budgeting…

A: Definition:   Capital budgeting: It refers to the long-term investment decisions that have been…

Q: 6. Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the…

A: Before choosing from the different alternatives, company has to take decision on the basis of cost…

Q: One of the modern methods of Capital Budgeting is: a. Profitability index O b. Accounting Rate of…

A:

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: In capital budgeting decisions, the profitability index and internal rate of return methods will…

A: IRR is the discount rate at which NPV of project is zero. In other words is rate which present value…

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: True or False: In solving a capital budgeting problem involving investment opportunities that are…

A: capital budgeting is the process of selection of the best project among all the projects available.…

Q: What is the major criticism of the payback and simple rate of return methods of making capital…

A: Cash payback method: Cash payback period is the expected time period which is required to recover…

Q: In capital budgeting decisions, are there reasons a company might choose to take a project that was…

A: Net present value (NPV) is value of all future cash flows discounted to the present value by either…

Q: What is the major short coming of using the payback period as the only criterion in making capital…

A: ANSWER    the major short coming of using the payback period as the only criterion in making capital…

Q: What two pieces of information does the payback method providethat are absent from the other capital…

A: The question is based on the concept of calculation of payback period as a capital budgeting…

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: 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: 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…

Q: Which of the following capital budgeting methods is biased against long-term projects such as…

A: The question is related to Capital Budgeting. The pay back period is the length of time required to…

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.