Why Pay back period method is not as effective as NPV?

Q: How must one discount a series of uneven receipts to find present value (PV)?

A: The cash payment or cash receipt of each period should be discounted individually and then add all…

Q: Examples of a market order, limit order and a stop loss?

A: To buy or sell Common stock or shares of a firm, you can place different types of buy/sell orders…

Q: How can we find the present worth of any uneven stream of payments?

A: The question is based on the concept of present value of uneven cash flow

Q: What happens if the payback period is within the acceptable range?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: pay back period?

A: Pay back period = Number of years fully covered + (Remaining part of investment to be covered/Next…

Q: Why do payers nevertheless persist in using shared savings components of alternative payment models?

A: Alternative payment methods are defined as the payment method for goods or services that are not…

Q: O Cash price less down payment equals

A: Cash Price minus Down payment = Amount Financed

Q: Give an example of an irrelevant future cost. Why is it irrelevant?

A:

Q: Explain why proponents of LIFO argue that it provides a better match of revenue and expenses. In…

A: "LIFO" stands for last-in, first-out, meaning that the recently purchased inventory items are…

Q: What three flaws does the regular payback have? Does the discounted payback correctall of these…

A: Three flaws of payback period: 1. Time value of money concept is ignored by the payback period. 2.…

Q: What is the principal objection to the payback method?

A: The Payback period is one of the traditional or non-discounting techniques of Capital budgeting. It…

Q: What are the shortcomings of the payback period criterion? Which of these shortcomings are accounted…

A: Payback method is a manner of evaluating capital projects which computes the time taken by the cash…

Q: In general terms, how would a change ininvestment opportunities affect the payoutratio under the…

A: Answer: In the residual dividend policy, the distribution is calculated after the company’s spending…

Q: Explain Payment Caps and Negative Amortization?

A: Payment Caps: A payment cap is a customer protection that bounds the amount that your monthly…

Q: Describe the strengths and weakness of payback method.

A: Definition:   Payback method: Payback method refers to the method which measures the time period…

Q: What is the discounted-payback method?

A: Payback period states the number of years that is taken by the project to recover the investment of…

Q: explain why payback period is not a preferred method

A: The payback period is a period in which the total costs of an investment are recovered through cash…

Q: What is the difference between an accounting break-even and a break-even NPV? Which will offer the…

A:

Q: What is the major advantage of using a fee-only financialplanner?

A: There are different types of financial planners to help investors plan their finances. Majorly,…

Q: How can we illustrate Settlement Costs?

A: A cost is a monetary value that is incurred by the company to acquire something or to produce…

Q: Define the term Discounted-Payback Period?

A: The payback period states the number of years that is taken by the project to recover the investment…

Q: List the advantages and disadvantages of the payback method.

A: Payback method is a capital budgeting method which helps to evaluate an investment based on the time…

Q: O Payback does not consider the time value of money

A: Capital projects refer to a project which is helpful in maintaining and improving the asset of the…

Q: What does “nonrecourse” financing mean?

A: Nonrecourse financing is a branch of commercial lending. It makes the lender only to repay from the…

Q: Explain the payback period model and its two significant weaknesses. How does the discounted payback…

A: The payback period one of  the method of capital budgeting. It shows the required time taken to…

Q: What are the features of the discounted payback period

A: DPP is the total time taken for the initial amount to equal to be the amount of discounted value of…

Q: What makes the risk-adjusted discount rate approach appealing in practical application?

A: Answer: The discount rate may be changed to offset the risk involved in a project in order to…

Q: ple of when one would choose to use the Payback Period Method instead of the NPV / IRR me

A: Step 1 One of the most important decisions a business owner or management team will ever make is to…

Q: What is the difference between an accounting break-even and a break-even NPV? Which will offer the…

A: Break-even point = Total Fixed Costs / Contribution margin per unit   Break-even ratio = Annually…

Q: What is the conventional-payback method?

A: Conventional Payback Method

Q: explain the disadvantages of each criteria; payback period, discounted payback, NPV, IR

A: To determine the economic feasibility of capital investment, several capital budgeting analysis…

Q: Explain why sunk costs are not considered in the analysis ofinvestment alternatives.

A: A sunk cost is also known as the retrospective cost, is a cost that cannot be recovered because it…

Q: Does Compounding Occur at a Different Rate than that at which payments are made? How?

A: Answer: The answer is no, because the compounding takes place at the same rate as that at which…

Q: “In CVP analysis, gross margin is a less-useful concept than contribution margin.” Do you agree?…

A: Contribution Margin:Contribution margin is the excess of selling price over the variable costs of a…

Q: What are the shortcomings of the payback period?

A: Payback period: The payback period assesses the time period required to recover the initial…

Q: What are the weaknesses of the payback method?  What other options do you have?

A: Pay back period is period required to recover initial amount of investment.

Q: Briefly explain the problems associated with the payback method.

A: Capital budgeting is referred as the process of decision making which is used by companies to…

Q: What is the discounted payback period?

A: Discounted payback period is period for which present value of cash flow is equivalent to initial…

Q: Why do some people say that MIRR should stand for Meaningless Internal Rate of Return?

A: Question is based on the concept of Business Finance

Q: What is the difference between the regularand discounted payback periods?

A: The Regular Payback period is one of the capital budgeting techniques. It refers to the time period…

Q: What is the cost of accrued liabilities? If accruals have such a low cost, why don’tfirms use them…

A: An accrued liability refers to an expense a business has incurred during a specific period but has…

Q: What are the weaknesses of the payback method?

A: Payback period is the amount of time required for firm to recover its initial investment in projects…

Q: Disadvantage of payback

A: Disadvantages of payback 1. Payback doesn't provide benefit in amount from the project it only…

Q: What are the two main drawbacks of the payback method?

A: Payback period is the method in capital budgeting which refers to the time needed to recoup the…

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.