Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the project’s entire life into account.   The discounted payback period does not take the time value of money into account.   The discounted payback period is calculated using net income instead of cash flows.

Q: Which of the following statement is   true?   O a. Sunk cost is not relevant in   capital…

A: Capital budgeting decisions are used to evaluate new projects, opportunities, and investments such…

Q: What is the main disadvantage of discountedpayback? Is the payback method of any realusefulness in…

A: The discounted payback method is a method of evaluating the payback period of the investment carried…

Q: What are the benefits and limitations of using the payback method to choose between projects?…

A: 1. Benefits of Payback method of Capital Budgeting This method ensures that all  cash inflows are…

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

A:

Q: Explain how inflation impacts capital budgeting analysis.  Why do we care? How is NPV impacted if…

A: Nominal rate and inflation rate are related to each other through real rate as shown below. Nominal…

Q: Pls help with below homework.

A: Payback period refers to the amount of time it takes for a business or firm to recover the initial…

Q: The general rule for using the weighted-average cost of capital (WACC) in capital budgeting…

A: WACC is the Weighted Average Cost of Capital of a company. A company's capital consists of debt and…

Q: Please explain why the net present value (NPV) method is preferred over the payback method when…

A: NPV method is preferred over payback method because of following reasons 1. NPV method shows project…

Q: True or False: It is often impossible to forecast the cash flows from follow-on projects associated…

A: TRUE

Q: The NPV Rule O is flawed due to a technical factor called the 'reinvestment rate assumption. O is…

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

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 statements is correct regarding the payback method? Takes account of…

A: Payback period is a tool of capital budgeting used to evaluate projects and investments.

Q: You have determined the profitability of a planned project by finding the present value of all the…

A: We determine the profitability of project by discounting the future cash flows with appropriate…

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: In a capital budgeting analysis, why are interest charges not deducted when a project’s cash flows…

A: Capital Budgeting:  The process to evaluate an alternative based on the estimated future benefits…

Q: Under what circumstances the cross over rate will be an important point in capital budgeting. Can it…

A: Capital Budgeting is a process in which the company decided on the project investments which would…

Q: Which of the following is not a capital budgeting technique? Select one: a. Net present value b.…

A: Capital budgeting: Capital budgeting is the technique used for analyzing the investment in long term…

Q: Which one of the following statements is correct concerning the payback rule?   a. The payback…

A: Answer -   Payback Period -  The payback period is the amount of time it will take to recover the…

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

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

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: Of the capital budgeting techniques discussed, which works equally well with normal and non-normal…

A: The correct answer is “Net present value”.

Q: When the present value of the cash inflows exceeds the initial cost of a project, then the project…

A: If present value of cash inflows exceeds the initial cost of a project, then NPV of the project will…

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: Amster Corporation has not yet decided on the required rate of return to use in its capital…

A: Capital budgeting is used to evaluate the projects. With the help of capital budgeting, the…

Q: Which of the following statements is incorrect regarding project appraisal techniques? At IRR, the…

A: Net Present Value ("NPV"), Internal Rate of Return ("IRR") and Profitability Index ("PI") are all…

Q: Before making capital budgeting decisions, finance professionals often generate, review, analyze,…

A: Option 1 and 2 are correct.Correct options:The discounted payback period improves on the regular…

Q: If a firm has only independent projects, a constant WACC, and projects with normal cash flows, the…

A: This declaration is valid because of the reasons why it is possible to approve or deny individual…

Q: Which of the following statements is CORRECT? Assume that the project being considered has normal…

A: Internal Rate-of-Return is discount rate that makes NPV(Net Present Value) zero for an investment…

Q: What types of projects require the least detailed and the most detailed analyses in the capital…

A: Capital budgeting is a corporate method that determines future large ventures or investments.…

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: An advantage of the net present value method over the internal rate of return model in discounted…

A: The internal rate of return model considers the constant discounting rate for discounting the cash…

Q: In the textbook's capital budgeting examples, the book assumes that the firm recovers all of its…

A: The difference between a company's current assets and current liabilities, such as cash, accounts…

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: When evaluating a project with non-normal cash flows (cash flows change sign for at least two times…

A: The internal rate of return method is a advancement upon internal rate of return method which will…

Q: 1- What are the payback and discounted payback methods? What are their main weaknesses? 2- What are…

A: As per out policy, I am answering first three sub-parts. Please repost the question by asking…

Q: Which of the following statements is false? A. Net incomes are not cash flows. Financial Managers…

A: Capital budgeting are the process through which the firm decide which project to take up.

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.