Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. A key difference between the IRR and the MIRR is a. cash flows are assumed tobe reinvested at the risk - free rate. b. unlike IRR, MIRR is superior to NPV as aproject screener. c. IRR is a better indicator of the rate of return on the projectand its reinvested cash flows. d. cash flows are assumed to be reinvested at theWACC.

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Description: Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. A key difference between the IRR and the MIRR is a. cash flows are assumed tobe reinvest

IRR is rate of return at which present value of cash flow is equal to initial investment in the…

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A key difference between the IRR and the MIRR is a. cash flows are assume be reinvested at the risk - free rate. b. unlike IRR, MIRR is superior to NPV as project screener. c. IRR is a better indicator of the rate of return on the proj and its reinvested cash flows. d. cash flows are assumed to be reinvested a

A key difference between the IRR and the MIRR is a. cash flows are assume be reinvested at the risk - free rate. b. unlike IRR, MIRR is superior to NPV as project screener. c. IRR is a better indicator of the rate of return on the proj and its reinvested cash flows. d. cash flows are assumed to be reinvested a

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13MC: Which of the following discounts future cash flows to their present value at the expected rate of...

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When using the NPV method for a particular investment decision, if the present value of all cash Inflows Is greater than the present value of all cash outflows, then _______ . A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low
All of the followings are True when the net present value method is used to choose between two investment alternatives, except: OA All cash inflows and outflows should be considered in calculating the net present value of the two alternatives. OB. Oc The net present value of the two alternatives calculated using the total cost approach need to be compared. Managers should choose the alternative that has the least total cost from a present value perspective. The relevant cash flows should be isolated from the irrelevant cash flows. OD.
This method solves for the interest rate that equates the equivalent worth of a project's cash outflows (expenditures) to the equivalent worth of cash inflows (receipts or savings). O A. Payback Period O B. Profitability Index O C. Rate of Return O D. MARR
Explain what is meant by the internal rate of return of an investment and discuss its relationship to the NPV of an investment. Explain the problems posed for the use of the IRR when it is necessary (i) to choose between two investments and when (ii) investments are characterised by negative net cash flows at the end of their lives. Discuss and evaluate the use of the payback period as an investment criterion.
3. In a comparison of the NPV and IRR techniques, which of the following is true? statements A. Both methods give the same accept or reject decision, regardless of the pattern of the cash flows. B. IRR is technically superior to NPV and easier to calculate. C. The NPV approach is superior if discount rates are expected to vary over the life of the project. D. NPV and accounting ROCE can be confused.
Which of the following is not a method for incorporating risk analysis into capital budgeting? a. Positive/Negative analysis b. Monte Carlo simulations c. Scenario analysis d. Sensitivity analysis e. Decision tree models
When evaluating projects using internal rate of return,? A. projects having lower early-year cash flows tend to be preferred at higher discount rates. B. projects having higher early-year cash flows tend to be preferred at higher discount rates. C. projects having higher early-year cash flows tend to be preferred at lower discount rates. D. the discount rate and magnitude of cash flows do not affect internal rate of return.
Differences between the ERR and the IRR include the following: a. The ERR will yield a unique solution (no multiple rates of return as in the IRR) b. In the ERR, funds recovered from the investment are assumed to earn returns equal to the MARR c. The ERR is always a value somewhere between the IRR and the MARR d. All of the above.
We discussed the use of sensitivity analysis and simulation analysis in the context of estimating cash flows for capital budgeting. Explain another context where cash flows must be estimated and these techniques could be used to measure estimation risk.
Discuss Positive side effects and negative side effects cash flows? Provide examples. Explain thestand-alone principle. Provide examples.
Which is least likely correct about security valuation?a. The calculated or determined value considers the stream of future cash flows.b. The calculated or determined value equals the market price.c. The calculated or determined value considers the risks involved and the opportunity cost.d. The calculated or determined value allows the investors to evaluate whether a security isovervalued or undervalued.e. All of the above
Which of the following statements is correct? The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR. O The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period. The NPV method assumes that cash flows will be reinvested at the risk- free rate, while the IRR method assumes reinvestment at the IRR. O The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate.