a. Pay-back period b. Discounted Pay-back period c. Internal Rate of Return (IRR)

Q: 1. What is the payback period

A: Payback Period is the Period the company is able to recover the investment it has made for a project…

Q: Compare and contrast dollar returns and rates of return.

A: The returns from any investment can be calculated in terms of value (amount terms) or percentages.

Q: Create a chart reflecting the conventional payback period?

A: The question is based on the calculation of payback period.

Q: Suppose that you deposited $5,000 in a savings account. It has been 15 years and your current…

A: Interest refers to the amount charged by the lender on the lent amount. The borrower of the loan is…

Q: The CAPM model can be used to derive the cost сapital. A. Equity B. Borrowed С. Total D. Unlimited

A: The CAPM (capital assets pricing model) is a technique that helps to derive the cost of capital with…

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: Which payback method has a profit element?

A: Payback method is a capital budgeting technique which is used to evaluate various investment…

Q: Explain payback period

A: Answer: Payback period is nothing but the time a company gets back the money that is originally…

Q: What is the difference between spot rates andforward rates? When is the forward rate at a premium to…

A: Spot rates are the rates that prevail in the cash market or the rates that are applicable today.…

Q: explain the application of compounding measures: effective or nominal / interest or discount rates,…

A: The sum that the lender demands from the borrower in addition to the principal amount is known as…

Q: Describe the two forms that the calculation of the payback period can take?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: If you have a $15,000 car note with a $450.00 monthly payment, payable over 36 months, what interest…

A: In the given question we need to compute the interest rate from following details: Car note value =…

Q: If you have a $19,500 car note with a $380.00 monthly payment, payable over 60 months, what interest…

A: In the above question we need to compute the interest rate from following details: Value of card…

Q: What is the discounted-payback method?

A: Payback period states the number of years that is taken by the project to recover the investment of…

Q: The discount rate is the combination of what two types of discounting?   a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: Briefly explain the following a. Relation between present value and interest rate

A: Present value = Applying time value to the future cash flows using interest rates Present Value =…

Q: What is limitation of Payback period, Net Present Value (NPV) and Internal rate of return (IRR).…

A: i) Payback period: Payback period is the expected time period which is required to recover the cost…

Q: Payback Period Modified Payback Period Net Present Value Profitability Index Accounting Rate of…

A: Here, we have to find these financial topics.

Q: PROVIDE - PRESENT VALUE, FUTURE VALUE, AND internal rate of return (IRR)

A: Present and Future Value: The current value of a cash flow that is expected to occur at some time in…

Q: Lou Barlow, a divisional manager for Sage Company, has ar year period. His annual pay raises are…

A: It's important to note that the IRR should be interpreted in conjunction with other financial…

Q: The internal rate of return method provides a rate of return that approximates:   Both the…

A: The internal rate of return shows the estimated rate of growth in a year from the particular…

Q: - Calculate the average rate of return for each stock during the period 2x15 through 2x19. Assume…

A: Realized return of a portfolio means that return which is going to be received from the portfolio.…

Q: Define each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR)…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: Define each of the following terms: f. Spot rate; forward exchange rate; discount on forward rate;…

A: The spot rate shall be the value of a good, security, or monetary system for immediate payment.…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: clearly distinguish between norminal interest rate and effective interest rate

A: The term interest rate can be defined as the fixed income received on the investment. . There are…

Q: a) DEFINE the following terminologies: i. Present value ii. Future value iii. Period iv. Interest…

A: In the given question we need to explain following terminologies: i. Present valueii. Future…

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: Describe the rules of accounting rate of return.

A: The accounting rate of return (ARR) is the percentage rate of return expected on investment or asset…

Q: A firm purchased a computer for 1500 EUR; the computer is used for 4 years and is then sold for 500…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Internal Rate of Return is the discount rate that sets NPV to 0. True or false?

A: IRR is the required rate of return for the project to have zero Net Present value.IRR can be…

Q: Calculate a currency's foward premium or discount based on interest rate differentials.

A: Using Interest rate parity theory, forward rate are calculated as follows by assuming the two…

Q: Which type of average rate of return best describes the average annual rate of return earned over…

A: A mutual fund's average yearly return is a percentage that indicates the fund's historical average…

Q: How Net present value, interest rate, and benefit change if cost increases.

A: Net present value means difference between present value of the cash inflows and present value of…

Q: Santana Rey is considering the purchase of equipment for Business Solutions that would allow the…

A: Payback period and accounting rate of return are two capital budgeting approaches that helps in…

Q: 5) One standard assumption for annuities and gradients is A) each payment occurs at the beginning of…

A: An annuity can be defined as equal payment series over an equal period sequence. In other words,…

Q: Which of the following theories can be assessed using data that exists at one specific point in…

A: Purchasing power parity: Purchasing power parity (PPP) is a concept which means that exchange rates…

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

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.