Why would an investor prefer the payback period to other methods of capital investment appraisal

Q: Discuss the advantages and disadvantages of using the Net Present Value method for analyzing capital…

A: Capital budgeting is the process that is used to analyze capital investment projects and involves…

Q: Explain what net operating working capital is, and explain how changes in that quantity can affect…

A: Net operating working capital is defined as excess of current operating assets over current…

Q: Should the economic engineers make capital-expenditure decisions based on a prediction about the…

A: The question is based on the concept of capital expenditure decision making, which is investment of…

Q: What distinguishes a capital investment from other investments?

A: Investments: It is the method by which an investor increases his value over some time for future…

Q: How would a researcher undertaking capital market research justify that a particular piece of…

A: The Capital Markets Research Group (CMRG) brings united researchers engaged in capital market…

Q: how a failed capital project may shape the future strategy of investment capital.

A: Introduction: Capital projects are nothing but a long term capital intensive initiative aimed at…

Q: Explain how a net present value (NPV) profile is used to compare capital projects. How does this…

A: NPV also known as net present value is basically the present  value of all the future cash flows.…

Q: what sense is a firm's WACC also the rate of return that should be earned on its investments?

A: Step 1   The WACC of a company is the overall needed return, which is the discount rate that should…

Q: Demonstrate the link between net present value and internal rate of return and how they may be used…

A: According to the question, the relationship between net present value and internal rate of return

Q: why is a need for investor to evaluate the investment ?

A: All investments will have a certain percentage of risk. To control the future risks in the…

Q: Discuss the advantages and disadvantages of using (a) payback, (b) net present value and (c )…

A: Payback Period: It refers to the period in which the project's or investment's initial cost is…

Q: Capital investment decisions often involve all of the following: qualitative factors or…

A: Solution Introduction Capital investment means investment in capital assets The capital assets are…

Q: what is the benetifs of the accountants involvement in the capital investment decision?

A: In capital investment decision it is advisable to involve accountant. Following are the benefits for…

Q: the Capital Asset Pricing M

A: Explanation : In simple words, Capital asset pricing model for valuing the cost of capital contains…

Q: What is the difference between VaR as it has been traditionally measured and stressed VaR? Explain…

A: A definition of value at risk is as follows: Value at Risk (VaR) is a metric that estimates the size…

Q: Which of the following are two methods of analyzing capital investment proposals that both ignore…

A: Which of the following methods of evaluating capital investment proposals? Following four methods…

Q: What is the difference between capital budgeting decisions and capital structure decisions? Which of…

A: Capital budgeting: Capital budgeting is the process of evaluating different investment projects that…

Q: Payback period is one of the nondiscounting models used in capital investment decisions.  What are…

A: Payback period refers to the period in which the initial investment is recovered.

Q: What are the principal objections to the use of the average rate of return method in evaluating…

A: Average rate of return: Under this method, the average net income is used in evaluating the capital…

Q: Is it ever appropriate or acceptable to use the payback method of evaluating capital investment…

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: Discuss the principal limitations of the cash payback method for evaluating capital investment…

A: Cash Payback method:- it is a method which the accountant uses to calculate the different capital…

Q: why is a risk analysis important to the capital investment decision making process?

A: Risk is the uncertainty or possibility of loss due to the decision in investment process. Of all the…

Q: In practice, external factors can impact a capital investment. Give a current external factor that…

A: Current external factors which impact or cause instability of capital spending here or abroad.

Q: ith the use of an example, briefly explain the main difference between the ex-ante and the ex-post…

A: Main Difference between ex-ante and the ex-post opportunity cost of capital: Ex-post risk is…

Q: When and under what conditions the cross over rate will be used will be an essential consideration…

A: Introduction: The process through which the corporation decides on the project investments that will…

Q: The calculation of a hurdle rate when looking capital expenditures involves looking at what…

A: Generally companies take up new projects only when the project passes the hurdle rate (HR). As the…

Q: Please compare and contrast several of the different tools that can be used to evaluate potential…

A: Introduction: Solution: Capital Budgeting techniques and methods are used to measure and evaluate…

Q: What are the Factors That Complicate Capital Investment Analysis

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Capital investment decisions involve investments in long-term operational assets.  TRUE OR FALSE?

A: Capital investment decision: These decisions are made by the management to utilise the capital funds…

Q: Capital Budgeting is acquiring inputs with long term returns. Which of the following author gave the…

A: Capital budgeting is the process that a business uses to determine which proposed fixed asset…

Q: What is a capital investment and why do companies need to evaluate whether to make the investment or…

A: Capital Investment:-It is an investment that a company made to purchase its fixed assets or…

Q: Briefly discuss the following approaches of working capital financing : Conservative approach…

A: Working Capital Financing: Working capital finance is finance intended to increase the working…

Q: What is meant by an investment project’s internal rate of return? How is the internal rate of return…

A:

Q: What are the two types of risk according to the Capital Asset Pricing Model? Which of the two types…

A: The Capital Asset Pricing Model (CAPM) describes the link between systematic risk and expected…

Q: Discuss the importance of determining a firm cost of capital?

A: The cost of capital is of paramount importance when making the capital expenditure decisions. Cost…

Q: What is the payback method of analyzing capital investments?

A: Formula: Payback period = Initial Investment / annual cash inflows

Q: Explain the term Return on Invested Capital?

A: The formula used to compute return on invested capital:

Q: Briefly discuss capital asset price model from the standpoint of investors and managers.

A: CAPM from standpoint of managers : Capital asset pricing model is of high value for financial…

Q: a) Explain the Net Present Value relating to investment of funds in long term investments. b)…

A: Net Present Value: While making decision the net present value of Project is calculated to determine…

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.