If a firm is planning for an international project, the manager should understand that the project's NPV would be ______ by the size of the initial investment and the project's required rate of return. A. positively; negatively B. positively; positively C. negatively; negatively D. negatively; positively

If a firm is planning for an international project, the manager should understand that the project's NPV would be ______ by the size of the initial investment and the project's required rate of return. A. positively; negatively B. positively; positively C. negatively; negatively D. negatively; positively

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3DQ

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Concept explainers

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.

Question

positively; negatively

positively; positively

negatively; negatively

negatively; positively

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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1. The Net Present Value decision technique may not be the only pertinent unit of measure if the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors. 2. Which rate-based decision statistic measures the rate of return, including the cost of capital for a project? A. Profitability Index, PI B. Net Present Value, NPV C. Internal Rate of Return, IRR D. Modified Internal Rate of Return, MIRR 3. When looking at these types of projects, one must consider any cash flows that arise from installing the new equipment. A. new B. cost-cutting C. incremental D. replacement E. all of the above. 4. Of the capital budgeting techniques discussed, which works equally well with normal and non-normal cash flows and with independent and mutually exclusive project? A. payback period B. net present value C. discounted payback period D. modified internal rate of return 5. The approach to convert an infinite series of asset…
Under what circumstances should the Profitability Index be used to select projects? Question 4Select one: a. In all cases where projects are mutually exclusive. b. In all cases where projects are independent. c. When there are independent projects, and the firm has insufficient capital to undertake all positive-NPV projects. d. When there are mutually exclusive projects, and the firm has sufficient capital to undertake all positive-NPV projects.
Help pls
Which statements are INCORRECT? Check all that apply: when IRR is positive, the project is acceptable when profitability index is positive, the project is acceptable a decrease in a firm's WACC will increase the attractiveness of the firm's investment options when required return is less than internal rate of return, the project is acceptable
is this accurate
What should a manager do with a project that has two internal rates of return (IRRs)? O a. Do the project if the higher of the two IRRs exceeds the cost of capital. O b. Do the project if the lower of the two IRRS exceeds the cost of capital. Oc. Choose the IRR that looks the most reasonable, and do the project if this chosen IRR is greater than the cost of capital. Od. Abandon the project, as it involves unconventional cash flows. O e. Do the project if the net present value of the project is greater than zero.
An ERM is: A. Economic capital B. Enterprise stress-testing C. An attempt to take risk into more consideration than in the past D. A technology resource management silo
What value would a discussion of the profitability index add to a conversation where you are trying to communicate the benefits of a positive net present value project to a firm’s general management team? (Explain clearly and in-depth.)
Paragraph Styles Internal Rate of Return is used to estimate the profit of potential investments. However, this can be used in Firms to determine if an investment is worth pursuing or buying. How might the firm use IRR to make a decision about the possible investment? Internal Rate of Return is used to measure how the Firm will make profits or lose money in the project. Therefore, it makes it easier to determine the profitability and the higher the Internal Rate of Return the higher the profit comes into the company (business). Do NOT simply cut and paste information from the web - answer in your own words. QUESTION 5 The firm has contacted a bank to negotiate a loan to purchase the legal tech' software. A loan of £10,000 will be needed and the bank has offered three options, each to begin on 1st February 2023: (0) (ii) (III) £10,000 loan at 6% simple interest. The entire loan is to be repaid in one lump sum after five years, with interest paid at the end of each year of the loan.…
How can I answer questions 1-2 and How can I explain if this a good project for the business to accept and why
From Study Case Allied Food Products, please help with the following questions: k.) Based on common sense, how highly correlated do you think the project would be with the firm's other assets? (Give a correlation coefficient or range of coefficients, based on your judgment.) 1.) How would the correlation coefficient and the previously calculated s combine to affect the project's contribution to corporate, or within - firm, risk? Explain. m.) Based on your judgment, what do you think the project's correlation coefficient would be with respect to the general economy and thus with returns on “the market”? How would correlation with the economy affect the project's market risk? n.) Allied typically adds or subtracts 4% to its WACC to adjust for risk. After adjusting for risk, should the lemon juice project be accepted? Should any subjective risk factors be considered before the final decision is made? Explain.
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