Net Present Value, Unit 3

This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero. Group of answer choices A. internal rate of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method

The present value of an investment's future cash flows divided by its initial cost is the: O Net present value. O Internal rate of return. O Average accounting return. O Profitability index. O Payback period.

Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F|P,i,n–t) factors? a. 0 b. The unknown value of ERR (i′) c. MARR d. IRR.

Which method does not consider the time value of money? Choose the correct. A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

Annuity Present Value Inputs Payment Discount Rate/Period Number of Periods Present Value using a Time Line Period Cash Flows Present Value of Each Cash Flow Present Value Annuity Present Value using the Formula Present Value Annuity Present Value using the PV Function Present Value

This method evaluates the return of an investment by dividing the annual average income by the average investment, Select one: a. Discounted Approach b. Simple rate of return Method c. Cash Payback Method d. Internal Rate of Return Method

Provide answer general Accounting question

The profitability index is calculated by _________.   Multiple choice question. dividing the initial investment by the sum of the future cash flows dividing the sum of the future cash flows by the initial investment dividing the PV of the future cash flows by the initial investment dividing the initial investment by the PV of the future cash flows

Give typing answer with explanation and conclusion

Which of the following methods consider the time value of money? A. payback and accounting rate of return B. payback and internal rate of return C. internal rate of return and accounting rate of return D. internal rate of return and net present value

The formula for calculating net present value (NPV) involves: a) Adding the initial investment and future cash flows b) Discounting future cash flows to the present and subtracting the initial investment c) Dividing future cash flows by the initial investment d) Multiplying future cash flows by the discount rate

Discounting an investment’s cash flows using the internal rate of return will result in which of the following? Group of answer choices net present value of one net present value of zero positive net present value negative net present value

Which figure of merit provides an interest rate at which the present value of the future cash flows equals the amount invested? a) NPV b) IRR c) Cap Rate d) DCF   Please ensure accuracy and explain your choice

What is the formula for the following: Payback period. Net Present Value Internal Rate of return Rate of Return

Financial assets management decision-making often involves determination of the Present Value (PV) of the flow of money over time. If a monetary PV is given by:  PV =  Gt/(1+m)t (i) Identify and explain each of the variables: G, m, and t. (ii) Explain how an increase in m would impact the PV of this financial asset. (iii) Find how much would be required to generate a PV of 890, over a 5 years period, at a constant annual interest rate of 4 percent.

Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a PW value calculated at the MARR, and (2) the IROR value i*.

Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1

Which capital budgeting technique measures all expected future cash inflows and outflows as if they occurred at a single point in time? Group of answer choices a. sensitivity analysis b. accrual accounting rate-of-return method c. net present value method d. payback method