Which of the following statements is true about the internal rate of return?   a. It is the interest rate that sets a project's net present value at zero.   b. It is the minimal acceptable interest rate on an investment.   c. It is the difference between the present value of the cash inflows and outflows associated with a project.   d. It is the difference between the present value of a cash outflow and the depreciation associated with an asset.

Q: If the sum of the incremental cash flows is negative, what is known about the rate of return on the…

A: Incremental Analysis: The method to measure the viability of different options related to business…

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: What is the typical discount rate used with the Net Present Value (NPV) when project risk is the…

A: a) The rate of return the shareholders expected to get, or the rate at which the company borrows,…

Q: Payback period is the time in which the initial cost of an investment is expected to be recovered…

A: The payback period is the time it takes to repay the cost of an investment or to reach the breakeven…

Q: Which of the following statements is false? (You may select more than one answer.)a. The payback…

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

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: Which of the following is the correct definition for present value (PV)?

A: Present value is an important concept in finance which is based on the concept of time value of…

Q: Which of the following statements is (are) true about project appraisal methods: (i) NPV is the…

A: (i) NPV is the best measure for project appraisal even when capital is rationed.   There is no such…

Q: Why is it not always possible for the cash borrowed (released) from a project to be reinvested to…

A: We need to use the concept of capital budgeting and internal rate of return to answer the question.

Q: Assume a project has normal cash flows (i.e. the initial cash flow is negative and all other cash…

A: Option B) - All else equal, a project's N.P.V increases as the cost of capital declines.

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: True or False  A project will have multiple internal rates of return if its future net cash flows…

A: Internal rate of return (IRR) is the annual rate of return which is anticipated from the cash flows.…

Q: Which of the following cash flows are not considered in the calculation of the annual cash-flow for…

A: Proceeds from selling an old asset which is being replaced by a new asset It does not impact the…

Q: Question 1   Which one of the following statements is NOT correct?     Group of answer choices   If…

A: Capital budgeting is a technique to estimate the profitability of the projects. There are various…

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: 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: 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: 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: (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: entify if each of the following would be included or excluded in forecasting cash flows for a…

A: When forecasting future cash flows only those cash flows, which will incur in future [ incremental ]…

Q: The method that measures a projects return based on present values is the: Internal Rate of Return…

A: The current value of an investment based on the return, which will be received on a predefined…

Q: Assuming that a project has already been evaluated using the following techniques, the evaluation…

A: There will be no effect on change in residual value of project, if the payback period is less than…

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: The AW of a project can be estimated by reducing all cash flows including the capital investment,…

A: Annual worth is the equivalent annual value for the cash flows for the given investment project.

Q: Mathematically, we can determine the rate of return for a given project’s cash flow series by…

A: When Cash Flows are discounted by using Internal Rate of Return for a period of cash flows held.…

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?

A: Net Present Value (NPV) Net Present Value method is a discounting cash flow technique used in…

Q: Why do NPV method and the IRR method sometimes give different rankings of mutually exclusive…

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

Q: Which of the following statements Is false with respect to the simple rate of return? Multiple…

A: Formula: Simple rate of return = Average profits / Initial investment

Q: Calculate internal Rate of Return of the project. Should the project be accepted? If reinvestment…

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

Q: Which of the following statements is most correct? If a project’s internal rate of return (IRR)…

A: IRR or Internal Rate or Return is discount rate that discounts Net Present Value(NPV) of any…

Q: Which of the following statements is (or are) true? (Select all correct responses.] O For a…

A: Correct statements are; 1)  2) 4) 5)

Q: If a capital project has a hurdle rate higher than its internal rate, then its profitability index…

A: Solution Explanation- A hurdle rate is the minimum rate of return required on a project or…

Q: If the net present value of a proposed investment is negative, what is the discount rate used? Less…

A: Net present value (NPV) is the significant present value difference between cash outflows and cash…

Q: In considering the payback period, ____.   a. it considers the time value of money in determining…

A: The term payback period refers to the amount of time required by a project to recover its initial…

Q: a. What is the typical discount rate used with the Net Present Value (NPV) when project risk is the…

A: a) The rate of return the stockholders anticipate to get, or the rate at which the firm borrows,…

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: Which of the following statements is most correct? If a project’s internal rate of return (IRR)…

A: SOLUTION-   EXPLANATION- IF IRR OF ANY INVESTMENT PROPOSAL IS MORE THAN ITS COST TO FINANCE CAPITAL…