EBK COST ACCOUNTING
15th Edition
ISBN: 9780133812763
Author: Rajan
Publisher: VST
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Question
Chapter 21, Problem 21.8Q
To determine
Discounted Cash Flow Method:
Discounted cash flow method refers to the method to evaluate a project after considering the time value of money or discounted
To explain: Whether the given statement is correct or not.
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Students have asked these similar questions
Which of the following is NOT a limitation of the payback rule?
O It does not consider cash flows occurring after the payback period.
O Lacks a decision criterion that is economically based.
O It does not consider the time value of money.
O It is difficult to calculate.
“Depreciation expenses have no effect on cash flows and, therefore, are not relevant in capitalexpenditure analysis.” Do you agree? Why or why not?
One problem with free cash flow method is gives too much weight to countinung value. Do you agree
Chapter 21 Solutions
EBK COST ACCOUNTING
Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3QCh. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6QCh. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8QCh. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....
Ch. 21 - Prob. 21.11QCh. 21 - Distinguish different categories of cash flows to...Ch. 21 - Prob. 21.13QCh. 21 - How can capital budgeting tools assist in...Ch. 21 - Distinguish the nominal rate of return from the...Ch. 21 - Prob. 21.16ECh. 21 - Prob. 21.17ECh. 21 - Capital budgeting methods, no income taxes. City...Ch. 21 - Prob. 21.19ECh. 21 - Capital budgeting with uneven cash flows, no...Ch. 21 - Prob. 21.21ECh. 21 - Payback and NPV methods, no income taxes. (CMA,...Ch. 21 - Prob. 21.23ECh. 21 - Prob. 21.24ECh. 21 - Prob. 21.25ECh. 21 - Prob. 21.26ECh. 21 - Prob. 21.27ECh. 21 - Prob. 21.28ECh. 21 - Prob. 21.29PCh. 21 - Prob. 21.30PCh. 21 - Prob. 21.31PCh. 21 - Prob. 21.32PCh. 21 - Prob. 21.33PCh. 21 - Prob. 21.34PCh. 21 - Recognizing cash flows for capital investment...Ch. 21 - Prob. 21.36PCh. 21 - NPV of information system, income taxes. Saina...
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Similar questions
- Describe the Replacement Analysis Using the Cash-Flow approach?arrow_forwardExplain how sunk costs and cannibalisation affect the determination of aninvestment’s incremental cash flows.arrow_forwardRelevant cash inflows and outflows in a discounted cash flow analysis are the differences in expected future cash flows as a result of making the investment. The income taxes saved as a result of depreciation deductions are relevant because they decrease cash outflows, but the depreciation itself is a noncash item. True False: Relevant cash inflows and outflows in a discounted cash flow analysis are the differences in past cash flows that resulted from making previous investments. False: neither the income taxes saved as a result of depreciation deductions nor the depreciation itself is considered relevant both B and C none of the abovearrow_forward
- In the discounted cashflow method, the discount rate is used for the following reasons EXCEPTa. it removes the timing differences of cashflows.b. it serves as the required rate of return of the asset being valued.c. it removes the expected riskiness of differing assetsd. it equalizes cash inflows to cash outflows so that the value would equal to the market value.arrow_forwardWhat is the difference between unlevered and levered cash flows? What discount rate must be applied when using unlevered cash flows versus levered cash flows? What is lease assignment? What is subletting? Explain at least one main difference between these methods.arrow_forwardwhat is the most likely fair value method to utilize the Discountd Cash Flow model?arrow_forward
- Why do the payback period analysis fail to recognize the difference between the present and future value of money?arrow_forwardWhich of the following phrases best describes the term " actual cash value"? a. market value b. appraised value c. replacement cost less depreciation d. original cost less depreciationarrow_forwardWhy is it more reasonable to assume, as the NPV rule does, that the intermediate cash flows are reinvested at the cost of capital rather than the internal rate of return (IRR)?arrow_forward
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