19. The following selected data for BC Company for 2022: Sales P 2,000,000 Variable Costs 1,200,000 Traceable Fixed Costs 200,000 Average Invested Capital 400,000 Capital Charge 15%

Q: Which capital investment methods require the use of a present value table?

A: Net Present Value: It is a measure of profitability for a project used primarily in capital…

Q: Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof…

A:

Q: What are the absolute measures of investment worth?

A: There are various approaches that can be utilized to decide a value or worth for the venture. Net…

Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…

A: This question explains about the present value of benefits surpasses and the cost of an investment…

Q: What does the volatility value represents?

A: Volatility for a given product or market index is a factual proportion of the scattering of profits.…

Q: Are there sources of value in an investment? what they are? and give an example for both?

A: Yes, there are various sources of value in an investment. An investment is a stock or a bond. People…

Q: When is a firm's investment pool equal to the MARR?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: What is investment decision making process ? And example

A: An investment decision refers to how a company's finances are to be invested in various assets in…

Q: What is the Relationship between the Incremental Cost and the Loan-to-Value Ratio?

A: The question is based on the concept loan to value ratio and its relationship with incremental cost.

Q: Which of the following decision criteria is the easiest to use and very popular among investors?…

A: The capital budgeting process uses different methods to analyze the projects. Each method has…

Q: What is the equivalent total investment cost (future worth)?

A: Answer: Equivalent total investment cost (future worth) method discounted cash flow method converts…

Q: Which are the two computational schemes for calculating this earned interest yield?

A: The two computational schemes for calculating the earned interest yield are compound interest scheme…

Q: What is the difference of Cost of Equity and the required rate of return on equities?

A: The amount of money that would be transferred to a company's shareholders if all of the company's…

Q: True or false. to apply the rate of return analysis correctly, we need to classify an investment i…

A: In the given question we need to answer whether the given statement is True or False.

Q: What does the annual effective yield represent?

A: Yield refers to the rate of return that is received by the owner of the security who has invested in…

Q: How is the payback period determined?

A:

Q: Explain APY (annual percentage yield)?

A: APY (Annual Percentage Yield):   It is the real return rate that is earned on an investment during a…

Q: What is current market value? Describe about it.

A: Market value: Market value is the price at which, both seller and buyer agree to exchange the…

Q: Discuss how the Accounting Rate of Return as an investment appraisal method is better than the Net…

A: Accounting ROR or ARR and Net Present Value(NPV) are tools that are used to make selection among…

Q: Describe the affects of the present value of an investment.

A: Present value of the investment: Present value of the investment is calculated using the cash flows…

Q: Explain Cumulative Investment Return Patterns?

A: Answer: Introduction: Cumulative return is the total amount of money that an individual has…

Q: Explain the investment pool?

A: Investment Pool: Investment Pool is the joint funds that is planned financial arrangements for a…

Q: Consider IRR on Incremental Investment when Initial IRR Flows are equal?

A: Answer: IRR is a measure in capital budgeting used to measure the value of the predicted…

Q: Discuss the pros and cons of the accounting rate of return as an investment criterion.

A: Definition: Average rate of return method: The average rate of return is the amount of income that…

Q: What is payout period and how is it calculated?

A: Companies employ various methods in the process of selection of the most financially appropriate…

Q: Describe IRR on Incremental Investmentment When InitialFlows are equal?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Why is the operating return on assets ratio also referred to as the operating returnon investment?

A: Introduction: Operating asset return is nothing but a profitability measure and it is a difference…

Q: what is payback period

A: Capital Budgeting: It is the planning process used to determine whether an organization invests in a…

Q: Make a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Investment returns can take two forms: state and explain each

A: Investment returns can take two forms - they are stated and explained below.

Q: 8. How should internal rate of return be calculated in terms of Net Present Value?

A: For a given project, there is a cost incurred at the beginning. It is called the Initial cost of the…

Q: Explain how differential weight to losses and gains effect investment decisions?

A: Prospect Theory assigns differential weight to losses and gains for making investment decisions.

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.