I. If there is a positive NPV, IRR is higher than the cost of capital. II. If annual net cash inflow is equal to the cost of investment, then, NPV is zero. A• FF B• TF C• TT D• FT

Q: If cashflows are discounted @   the net present value is     zero.   O a. RATE OF BORROWING…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: For one lump sum FV, the PV of your future liquidity decreases a. as FV increases.b. as t decreases.…

A: Where:PV is the present ValueFV is the future Valuer is the discount ratet is number of years

Q: which of the following statement is true>? 1. return on equity is the ratio of total assets to…

A: Capital budgeting is a way to evaluate profitability of new projects or investment by using various…

Q: _____isthe difference between the gross present value of the benefits of that action and the amount…

A: The difference between the present value of benefits and amount of investment is the key evaluation…

Q: the discount rate that equates the present value of the cash inflows with the present value of the…

A: In capital budgeting decisions calculate net present value is very important.

Q: As the level of risk increases, the corresponding cost of capital (i.e. the return) must…

A: As there is an increase in the risk level, investors would be demanding a higher return on an…

Q: Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a…

A: Answer: Rate of return is nothing but the interest rate paid on the outstanding balance of money…

Q: The internal rate of return method assumes that the cash flows over the life of the project are…

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

Q: What refers to the interest rate at which the present work of the cash flow on a project is zero of…

A: The RoR can be used with any asset that was purchased at some point in the past and will provide…

Q: 3. Compute Project Y's accounting rate of return. Project Y Numerator: Annual income Accounting Rate…

A: ACCOUNTING RATE OF RETURNAccounting Rate of Return is one of the Important Capital Budgeting…

Q: Which of the following is the correct definition for present value (PV)?

A: Present value is an important concept in finance which is based on the concept of time value of…

Q: The down payment or equity needed for this investment is $60,000 (outflow) Cash Flow $15,000 5,000…

A: Investment  $  60,000.00 Saving Rate 1.50% Loan Rate 8%

Q: Suppose an investment has conventional cash flows with positive NPV. How would it impact your…

A: Net Present Value is Positive of the project. Impact of these measurements on the decision of…

Q: This method solves for the interest rate that equates the equivalent worth of a project's cash…

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Q: An investment is guaranteed to have a unique value of IRR if which of the following is true? a.…

A: Given: The unique IRR value in the investment.

Q: All of the following statements regarding NPV are true EXCEPT: a. A positive NPV indicates the…

A: Net Present Value : It is the net of present value of cash inflow and present value of outflow.…

Q: Compute F so the following cash flows have a future worth of 0.

A: The worth of today’s dollar at a future date is the future value of the dollar. For example, the…

Q: is the difference between the gross present value of the benefits of that action and the amount of…

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

Q: oose the correct option- "This is the rate at which present value of cash inflows are equal to the…

A: Net present value or NPV is excess of present value of cash inflows over present value of cash…

Q: Please answer the following questions 1. _________________ is the discounted net future cash…

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Q: Which of the following statements are correct? The internal rate of return (IRR) generated by a…

A: IRR (Internal Rate of Return)IRR is the discount rate at which the net present value (NPV) of cash…

Q: In this method, the company compares the amount spent on the investment with the discounted expected…

A: a. Payback is the period in which the investment can break-even. b. NRV is the difference of…

Q: Select all the correct statements. The internal rate of return (IRR) generated by a positive cash…

A: IRR (Internal Rate of Return)IRR is the discount rate at which the net present value (NPV) of cash…

Q: If the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR,…

A: MARR is the minimum return the management requires from a project after adjusting the risks and…

Q: Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash…

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Q: The present value of an investment's future cash flows divided by its initial cost is the: O Net…

A: The present value of an investment is calculated by applying the time value of money concept to the…

Q: All else being equal, a company would choose to invest in a capital asset if which of the following…

A: Answer: If the expected accounting rate of return is greater than the required rate of return.

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A: It is an agreement between two or more parties to conduct the business and share the profits and…

Q: Investment Perlod 1 3 4 A $(1,000) $100 $100 $100 $100 $1,100 B (1,000) 264 264 264 264 264 C…

A: IRR is an estimation of required rate of return that is compounded on a project or investment to…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.