Which of the following statements is most correct? If a project’s internal rate of return (IRR) exceeds the cost of capital, then the project’s net present value (NPV) must be positive. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV. The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the cost of capital. Answers a and c are correct. None of the answers above are correct.

Q: Assume that both Projects A and B have normal cash flows, with one outflow followed by a series of…

A: IRR(Internal ROR) is the rate at which NPV(Net Present Value) of a project is zero. At IRR, PV of…

Q: A project is accepted if, Net present value of the project is positive. IRR is lower than cost of…

A: Net Present Value method is used to ascertain whether the proposal should be selected or rejected…

Q: The cash flows (CFs) of project A which you are considering to invest are given below. If the cost…

A: Net Present value is the sum of present value of future cashflows

Q: how many of the following investment criteria always use all of a projects cash flows in their…

A: Project cash flows generally refers to cash amount which is generated from investment which ignores…

Q: which of the following statement is true>? 1. return on equity is the ratio of total assets to…

A: Capital budgeting is a way to evaluate profitability of new projects or investment by using various…

Q: Is it worth the effort to estimate daily project cash flows?  Would doing so be helpful in the…

A: Cashflows are usually estimating yearly and then discounted at an appropriate discount rate

Q: nternal rate of return   For the project shown in the following​ table, calculate the internal rate…

A: IRR is rate at which net present value of the cash flows will be equal to 0 it is calculated using…

Q: Assume a project has normal cash flows. All else equal, which of the following statements is…

A: The correct answer is option (e).   The weighted average cost of capital includes the cost of…

Q: Which of the following is CORRECT? Select one: a. If the NPV of a project is negative, the IRR for…

A: NPV is a technique that helps the company to analyze the viability of the project i.e. the company…

Q: We should accept a project if the Net Present Value is positive and the Internal Rate of Return is…

A: Net present value is referred as the difference between the cash inflow's present value and also…

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

A: WACC is the required rate of return, where as IRR is the actual rate of return of the project. NPV…

Q: The internal rate of return method assumes that the cash flows over the life of the project are…

A: IRR is the required rate of return for the project to have zero Net Present value.

Q: f a project's cash flows are discounted at the internal rate of return, the NPV will always be…

A: Internal rate of return is the rate at which present value of cash inflows is equal to present value…

Q: How many of the following investment criteria always use all of a project's cash flows in their…

A: Capital budgeting techniques are used to determine whether the projects undertaken are profitable to…

Q: dependent capital investment project requires an initial cash outflow at time 0, followed by cash…

A: NPV is net present value that is difference between present value of cash flow and initial cash flow…

Q: If a net present value analysis for a normal project gives an NPV greater than zero, an internal…

A: NPV greater than 0

Q: which of the following should not be included in the cash flows for project analysis?…

A: Meaning of the given options: Opportunity cost : It is the benefit foregone from not selecting the…

Q: Which of the following should NOT be included in the cash flows for project analysis? Opportunity…

A: Explanation of the given option: 1. opportunity cost : It is the cost to be borne for not choosing…

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

A: Statement A: FALSE Because project NPV is found by discounting the cash inflows at a discount rate…

Q: Depending on the cash flow assumption, should the project must use continuous cash flow? why?

A: In continuous discounting and continuous cash flows, the assumption is that the cash stream happens…

Q: Which of the following should you focus when assessing the NPV of a project for a MNC? I.…

A: Net Present Value (NPV) is the technique of capital budgeting which defines the profitability of the…

Q: fe of the project. Which one of the following statements is correct with respect to this…

A: NPV Method assumes that all the cash flows are reinvested at the company's Cost of Capital. IRR…

Q: true or false? if we choose to use company's WACC in the calculation of the NPV of a project, we are…

A: Answer: True

Q: The best model to analyze the project financially is cash flow. Select one: O True O False

A: To evaluate a project for its acceptability, we need to analyze its profit generating ability.…

Q: Whenever the present value of the project is greater than the initial cash outlay then both the NPV…

A: Net present value is present value of cash inflows less present value of outflows. PI i.e.…

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

A: Since the higher the rate would be lower would be the present value factor..... which means the…

Q: 1) In IRR method the cash flows from a project are reinvested at the cost of capital. II) IRR is the…

A: Answer is A. III and I   Explanation- I) In IRR method the cash flows from a project are reinvested…

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: 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: Which of the following statements is CORRECT?   a.  An NPV profile graph shows how a project's…

A: NPV discount firm's cash flow at firm's cost of capital. NPV profile graph shows relation…

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

A: It refers to the rate of return that is computed by the company to make a decision of selection of a…

Q: Explain why the NPV of a relatively long-term project, defined as one for whicha high percentage of…

A: NPV of a project is determined as below: NPV=PV of Cash Inflows -Initial OutlayPV of Cash…

Q: Net present value (NPV) is one method that can be used evaluate the financial viability of potential…

A: Data given:: Initial investment           = $ 190,000 Annual  cash flow           = $ 58,000 n…

Q: If an investment project has a negative net present value (NPV), which one of the following…

A:

Q: To calculate net present value of a project with normal cash flows, find the present value of the…

A: To calculate net present value of a project with normal cash flows, find the present value of the…

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

A: We will solve this problem by eliminating each option. 1) option a:  A project’s NPV is generally…

Q: The net present value (NPV) method of investment project analysis assumes that the project's cash…

A: In NPV analysis, project's cashflows are discounted at the present value using a relevant discount…

Q: a. If your decision rule is to accept the project with the greater IRR, which project should you…

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

Q: For a project that has an initial cash outflow followed by cash inflows, the profitability index…

A: Profitability Index The Profitability Index (PI) is the ratio between the present value of cash…

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

A: Point 1 is not correct as IRR is not found using this method. Cash flows cannot be compounded at…

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.