Concept explainers
a)
To discuss: The calculation of a payback period is the measure that gives the information about a series of cash flows and the decision to rule criteria of the payback period.
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
b)
To discuss:The problems of payback period by assessing the cash flows
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
c)
To discuss: The advantages and the situation in which, the payback period will be appropriate.
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
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- “The greater the discount rate, the greater the present value of a future cash flow.” True or false? Explain your answer.arrow_forwardQuestion 12 Which of the following methods does not adjust for the time value of money: A internal rate of return B net present value C profitability index D payback periodarrow_forward2. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called . This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? The interest rate (I) that could be earned by deposited funds The trend between the present and future values of an investment The duration of the deposit (N) The present value (PV) of the amount deposited All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 9%, or 17%. Identify the interest rate that corresponds…arrow_forward
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