Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134067254
Author: Braun
Publisher: PEARSON
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Question
Chapter 12, Problem 3QC
To determine
To identify: The false statement with regard to the payback period.
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Please answer the following questions
1. _________________ is the discounted net future cash inflows divided by the initial cash outlay.
a.Payback
b.NRV
c.Profitability Index
d.IRR
2. __________________________ serves as a framework for measuring performance.
a.NRV
b.Payback
c.Profitability Index
d.Balanced Scorecard
3.
Which of the following is a performance measures of the balanced scorecard:
a.internal Business perspective
b.all of the answers are correct
c.financial Perspective
d.customer perspective
The accounting rate of return (also known as the unadjusted rate of return) can be calculated as: (See your Chapter 25 notes, page 2)
Initial cost of the investment divided by the annual net cash inflow
Initial cost of the investment minus the annual net cash inflow
Average amount of the investment divided by the average annual net income
Average annual net income divided by the average amount of the investment
Present value of net cash inflow divided by the initial cost of the investment
Annual net cash inflow minus the initial cost of the investment
Future value of net cash inflow divided by the initial cost of the investment
Present value of the net cash inflow minus the initial cost of the investment
Why does a company evaluate both the money allocated to a project and the time allocated to the project?
What is the next thing a company needs to do after it establishes investment criteria?
What is the payback method used to determine?
Why do businesses consider the time value of money before making an investment decision?
A fellow student studying Financial Accounting says, “The net present value (NPV) weighs early receipts of cash much more heavily than more distant receipts of cash.” Do you agree or disagree? Why?
Chapter 12 Solutions
Managerial Accounting (5th Edition)
Ch. 12 - Prob. 1QCCh. 12 - (Learning Objective 2) After identifying potential...Ch. 12 - Prob. 3QCCh. 12 - Prob. 4QCCh. 12 - Prob. 5QCCh. 12 - Prob. 6QCCh. 12 - Prob. 7QCCh. 12 - Prob. 8QCCh. 12 - Prob. 9QCCh. 12 - (Learning Objective 5) Which of the following...
Ch. 12 - Order the capital budgeting process (Learning...Ch. 12 - Prob. 12.2SECh. 12 - Prob. 12.3SECh. 12 - Prob. 12.4SECh. 12 - Prob. 12.5SECh. 12 - Prob. 12.6SECh. 12 - Prob. 12.7SECh. 12 - Prob. 12.8SECh. 12 - Prob. 12.9SECh. 12 - Prob. 12.10SECh. 12 - Prob. 12.11SECh. 12 - Prob. 12.12SECh. 12 - Prob. 12.13SECh. 12 - Prob. 12.14SECh. 12 - Prob. 12.15SECh. 12 - Identify ethical standards violated (Learning...Ch. 12 - Prob. 12.17AECh. 12 - Compute payback period and analyze changes...Ch. 12 - Prob. 12.19AECh. 12 - Prob. 12.20AECh. 12 - Prob. 12.21AECh. 12 - Prob. 12.22AECh. 12 - Calculate the payback and NPV for a sustainable...Ch. 12 - Prob. 12.24AECh. 12 - Prob. 12.25AECh. 12 - Prob. 12.26AECh. 12 - Prob. 12.27AECh. 12 - Prob. 12.28AECh. 12 - Prob. 12.29AECh. 12 - Prob. 12.30AECh. 12 - Prob. 12.31AECh. 12 - Prob. 12.32AECh. 12 - Prob. 12.33AECh. 12 - Prob. 12.34AECh. 12 - Prob. 12.35AECh. 12 - Prob. 12.36BECh. 12 - Prob. 12.37BECh. 12 - Prob. 12.38BECh. 12 - Prob. 12.39BECh. 12 - Prob. 12.40BECh. 12 - Prob. 12.41BECh. 12 - Prob. 12.42BECh. 12 - Prob. 12.43BECh. 12 - Prob. 12.44BECh. 12 - Prob. 12.45BECh. 12 - Prob. 12.46BECh. 12 - Prob. 12.47BECh. 12 - Prob. 12.48BECh. 12 - Prob. 12.49BECh. 12 - Prob. 12.50BECh. 12 - Prob. 12.51BECh. 12 - Prob. 12.52BECh. 12 - Prob. 12.53BECh. 12 - Prob. 12.54BECh. 12 - Prob. 12.55APCh. 12 - Prob. 12.56APCh. 12 - Prob. 12.57APCh. 12 - Prob. 12.58APCh. 12 - Prob. 12.59BPCh. 12 - Prob. 12.60BPCh. 12 - Evaluate an investment using all four methods...Ch. 12 - Prob. 12.62BPCh. 12 - Prob. 12.63SCCh. 12 - Discussion Questions 1. Describe the capital...Ch. 12 - Prob. 12.65ACTCh. 12 - Prob. 12.66ACTCh. 12 - Prob. 12.67ACT
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Similar questions
- An advantage of this method is that it highlights how a capital investment can affect a company’s liquidity. Select one: a. Payback Method b. Accounting Rate of Return Method c. Time Value of Money d. Discounted Cash Flow Techniques. Need typed answer only.Please give answer within 45 minutesarrow_forwardThe amount of time needed to recoup one's initial investment is referred to as the payback period, and it is also the amount of time required for an investor to reach the point when they are no longer losing money. Investments with shorter payback periods are considered more desirable, whereas those with longer payback periods are seen as less desirable. Imagine that you are the Chief Financial Officer. Critically evaluate the use of cash payback method (advantages and disadvantgaes) in determining the investment decisions with sufficient cash flow to ensure business sustainability in a competitive environment.arrow_forwardDefining capital investments and the capital budgeting process Match each definition with its capital budgeting method. Methods 1. Accounting rate of return 2. Internal rate of return 3. Net present value 4. Payback Definitions a. Is only concerned with the time it takes to get cash outflows returned. b. Considers operating income but not the time value of money in its analyses. c. Compares the present value of cash outflows to the present value of cash inflows to determine investment worthiness. d. The true rate of return an investment earns.arrow_forward
- Which of the following is an advantage of the cash payback method? a. takes into consideration the time value of money b. easy to use c. includes the cash flow over the entire life of the proposal d. emphasizes accounting incomearrow_forwardThis problem is useful for testing the ability of financial calculators or excel. Consider the following cash flows. How many different IRRs are there (Hint: search between 20 percent and 70 percent)? When should we take this project?( u can use Excel) Year Cash Flow 0 -$3,024 1 17,172 2 -36,420 3 34,200 4 -12,000arrow_forwardThe management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 61,000 $ 3,000 2 $ 5,000 $ 6,000 3 $ 12,000 4 $ 13,000 5 $ 16,000 6 $ 10,000 7 $ 8,000 8 $ 10,000 9 $ 9,000 10 $ 9,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? REQUIRED 1 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period ______ yearsarrow_forward
- Answer the following fast- A. Task whose incomes are adequate to compensate capital contributed for pace of return at that point net present worth will be A. negative B. zero C. positive D. autonomous B. Present estimation of future incomes is Rs 2000 and an underlying expense is Rs 1100 then benefit file will be A. 55.00% B. 1.82 C. 0.55 D. 1.82% C. Benefit record in capital planning is utilized for A. negative undertakings B. relative undertakings C. assess projects D. acquired tasks D. Different elements held steady, more prominent venture liquidity is a result of A. less undertaking return B. more prominent venture return C. more limited compensation period D. more prominent restitution period E. In count of inside pace of return, a supposition expresses that got income from project must A. be reinvested B. not be reinvested C. be acquired D. not be acquired F. In capital planning, number…arrow_forwardA project's IRR: A) All of these answers are correct. B is the average rate of return necessary to pay back the project's capital providers. C is equal to the discounted cash flows divided by the number of cash flows if the cash flows are a perpetuity. D will change with the cost of capital.arrow_forwardAnswer the following: 1. Calculating the payback period for a capital project requires knowing which of the following? a. Useful life of the project b. The company's minimum required rate of return c. The project's NPV d. The project's annual cash flow 2. The payback criterion for capital investment decisionsa. is conceptually superior to the IRR criterion b. takes into consideration the time value of money c. gives priority to rapid recovery of cash d. emphasizes the most profitable projects 3. What is an investor’s objective in financial statement analysis?a. To determine if the firm is risky b. To determine the stability of earnings. c. To determine changes necessary to improve future performance d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream 4. The current ratio isa. calculated by dividing current liabilities by current assets.…arrow_forward
- Next I need to determine the free cash flow and NPV, but I can seem to get it right. My costudents keep getting another answer can you help? I can't use excel, but computer is allowed Question1 : Determine the free cash flow for years 1 to 10 by taking into account all the cash flow components needed. Question 2: What is the project’s NPV under the given assumptions? Should Dunder Mifflin invest in the project?arrow_forwardThe internal rate of return is the: discount rate that makes present value of cash inflows equal to present value of cash outflows. discount rate that causes a project's after-tax income to equal zero. discount rate that results in a zero net accounting return. rate of return required by the project's investors.arrow_forwardAs a financial manager and evaluating capital investments, one of the most difficult portions of the analysis is to predict the future cash flows. Please pick a capital investment of your choice and describe how you would develop the Free Cash Flows. Pay particular attention to describing if working capital should be included and incremental revenue/income.arrow_forward
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