a. Compute economic value added for the three regions. Ignore taxes. b. How have these regions performed?

Q: Which of the following is NOT one of the ratios in Profitability group? Select one: a. Quick ratio…

A: Profitability ratios are those ratios which helps in measuring and determining the profitability of…

Q: Explain what is meant by future deductible amounts. Why is it important to understand this concept?

A: Future deductible amounts refer to the expenses that a business incurs in the current period but…

Q: weighted-average cost of capital

A: Weighted average cost of the capital represents the rate on which the company would be paying to…

Q: Give examples of the meanings of the following terms: (a) commonsize analysis, (b) vertical…

A: The Answer

Q: Can we compute the IRR for each option without knowing the revenue figure? Why?

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

Q: State why payback analysis should be used only as a supplemental analysis tool when an economic…

A: Payback analysis is the method for calculating payback period of an investment. Payback period is…

Q: A higher level of national income is bad from a current account point of view Select one : True Or…

A: A higher level of national income is bad from a current account point of view

Q: Explain briefly the ideas behind the dividend irrelevance theory.

A: The dividend irrelevance theory was created by Modigliani and Miller in 1961. The authors concluded…

Q: How is the compound interest used to establish economic equivalence?

A: Economic Equivalence means funds occurring at different time period will have different economic…

Q: How did you come up the number for Income before income tax, why did you subtract the quipment cost.

A: Income before tax=Tax expenseTax rate-Depreciation expense

Q: financial assets generate net income to the economy, while real assets define the allocation of…

A: Financial assets are assets are liquid assets that can easily and quickly be converted into cash…

Q: how to calculate NPV of realized revenue in each history (realizations of states) in stochastic…

A: Your answer:   There is no definitive answer to this question since it will depend on the specifics…

Q: By how much will each divisions income increase as a result of this transfer?

A: Concept used: Multiply the unit transferred by the difference between the transfer price and…

Q: Explain Growing Income through Provision of Services?

A: Commercial activity between a service provider and the client as the initial agreement is called the…

Q: How do you calculate the breakeven point in revenues?

A: Break-even point is the level at which profit is zero; that is, at the Break-even level, expenses…

Q: What will be Measures of Investment Performance Using Ratios?

A: It is always essential to evaluate the performance of the investments to decide whether the…

Q: The monetary value charged to customers for the performance of services sold is called a(n) O asset…

A: Performance of service is the completion of service as per specification, They earn revenue for the…

Q: Why is other comprehensive income being taught and utilized, and is it beneficial?

A: Other comprehensive income is a topic that is often included in accounting education and it is also…

Q: Describe how taxes and tax adjustment coefficients influence investment rankings?

A: Taxes and tax adjustment coefficients can have a significant impact on investment rankings. Tax…

Net Present Value

Net present value is the most important concept of finance. It is used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. The difference between the present value of cash inflow and cash outflow is termed as net present value (NPV). It is used for capital budgeting and investment planning. It is also used to compare similar investment alternatives.

Investment Decision

The term investment refers to allocating money with the intention of getting positive returns in the future period. For example, an asset would be acquired with the motive of generating income by selling the asset when there is a price increase.  

Factors That Complicate Capital Investment Analysis

Capital investment analysis is a way of the budgeting process that companies and the government use to evaluate the profitability of the investment that has been done for the long term. This can include the evaluation of fixed assets such as machinery, equipment, etc. 

Capital Budgeting

Capital budgeting is a decision-making process whereby long-term investments is evaluated and selected based on whether such investment is worth pursuing in future or not. It plays an important role in financial decision-making as it impacts the profitability of the business in the long term. The benefits of capital budgeting may be in the form of increased revenue or reduction in cost. The capital budgeting decisions include replacing or rebuilding of the fixed assets, addition of an asset. These long-term investment decisions involve a large number of funds and are irreversible because the market for the second-hand asset may be difficult to find and will have an effect over long-time spam. A right decision can yield favorable returns on the other hand a wrong decision may have an effect on the sustainability of the firm. Capital budgeting helps businesses to understand risks that are involved in undertaking capital investment. It also enables them to choose the option which generates the best return by applying the various capital budgeting techniques.