Can you please answer? If the coupon payment is made semi-annually, the price of a bond will be:O a. lower as compared to a bond that makes annual coupon paymentsO b. equal to its current yieldO c. equal to its YTMO d. same as a bond that makes annual coupon paymentsO e. higher as compared an a bond that makes annual coupon paymentsThe cost of equity of XYZ Ltd is 10%. The after-tax cost of debt is 5%. Its WACC is:O a. (WE X 5) + (WD X 10), where Wε is the weight on equity and WD is the weight ondebt.O b. below 5%O c. above 10%O d. No option is correctO e. 7.5% For a small company or a fresh startup, recovering the initial investment is of vital importanceto continue operations. In light of this, what would you recommend as the first choice forcapital budgeting method?a. None are suitable in this listO b. NPVO c. Payback periodO d. cost of capitalO e. IRRCFFA is also known as:O a. FATCAO b. No option is correct○ c. OCFO d. FCFe. WC

For a small company or fresh startup, recovering the initial investment is vital.Recommended method:…

Answered: If the coupon payment is made…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Discuss the payback period, NPV (net present value), and IRR (internal rate of return) methods for capital budgeting analysis. What result does each method provide the user? What are the limitations of each of these methods? Which method would you find most useful in making the best investment decisions for your business and why?
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Which of the following is not a capital budgeting technique? Select one: a. Net present value b. Discounted Payback period c. Payback Period d. Profitability index e. Ratio Analysis Which capital budgeting projects are preferred? Select one: a. Lower payback period b. None of the option c. Higher payback period d. Lower cash inflow projects e. Average payback period
Please describe NPV, IRR and their relationship. How do you evaluate each for making an investment decision? That is, what is a favorable NPV and IRR for making an investment decision. If you were developing a capital budgeting process at your employer, how would you prioritize your projects? What is the NPV when IRR = WACC, IRR>WACC, and IRR<WACC? There is a duplex for sale in Absecon for $700,000 at this time. It has 2 units that generate a total of $25,000 in gross rent. The property taxes are $4,000, commercial property insurance is $2,000, flood insurance is $1,000, and annual maintenance is $2,000. You expect to sell it in one year at a price growth of 0%. What is the NPV with a WACC of 10%. Is the IRR greater or less than the WACC? Would you invest in this project and why?
A disadvantage of using the accounting rate of return to evaluate investment alternatives is that Group of answer choices A. It is superior to IRR. B. When net incomes vary from year to year, the ARR will also vary across years, making the project seem desirable in one year and not another. C. It considers the time value of money. D. It is easy to understand and it allows comparison or projects. E. Using ARR has no disadvantages.
The purpose of capital budgeting is to: Group of answer choices Avoid all projects that involve risk control the short-term financing used by a firm. determine the correct mix of debt and equity for a firm. identify assets/projects that produce value in excess of their cost.
3. I need help with multiple choice finance home work question Which of the following statements is incorrect? If a firm's target average accounting return is less than that calculated for a given project then the project should be accepted. If the NPV of a project is positive, it should be accepted. If a project has a payback which is faster than the company requires the project should be accepted. If the cost of capital is greater than the IRR, the project should be accepted. If a project has a profitability index greater than one the project should be accepted.
Which capital budgeting projects are ?preferred اخترأحد الخیارات a. Higher payback period O b. None of the option O c. Average payback period O d. Lower payback period O e. Lower cash inflow projects
Suppose a firm makes the following policy changes. If the change means that external nonspontaneousfinancial requirements (AFN) will increase, indicate this with a (+); indicate adecrease with a (-); and indicate an indeterminate or negligible effect with a (0). Think interms of the immediate short-run effect on funds requirements.a. The dividend payout ratio is increased. _____________b. Rather than produce computers in advance, a computer companydecides to produce them only after an order has been received. _____________c. The firm decides to pay all suppliers on delivery, rather than aftera 30-day delay, to take advantage of discounts for rapid payment. _____________d. The firm begins to sell on credit. (Previously, all sales had been on acash basis.) _____________e. The firm’s profit margin is eroded by increased competition; sales aresteady. _____________f. Advertising expenditures are stepped up. _____________g. A decision is made to substitute long-term mortgage bonds for…
You can come across different situations in your life where the concepts from capital budgeting will help you in evaluating the situation and making calculated decisions. Consider the following situation: The following table contains five definitions or concepts. Identify the term that best corresponds to the concept or definition given. Concept or Definition Term An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project Creates value for a company because it gives the company the right but not the obligation to take future action to increase its cash flows The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed Marston Manufacturing Co. owns a warehouse that it is not currently using. It could sell…
Please the question in its entirety! 3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Cold Goose Metal Works Inc.: Last Tuesday, Cold Goose Metal Works Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company’s CFO remembers that the internal rate of return (IRR) of Project Omicron is 13.8%, but he can’t recall how much Cold Goose originally invested in the project nor the project’s net present value (NPV). However, he found a note that detailed the annual net cash flows expected to be generated by Project Omicron. They are: Year Cash Flow Year 1 $2,400,000 Year 2 $4,500,000 Year 3 $4,500,000 Year 4 $4,500,000 The CFO has asked you to compute Project Omicron’s initial investment using the information currently…
The duration of time within which the investment made for the project will be recovered by the net returns of the project is known as а. Accounting rate of return method b. Payback period С. Net present value method d. Period of return Capital budgeting is the process of evaluating and selecting short-term investments that are consistent with the firm's goal of maximizing owners' wealth. Select one: True False

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