Answered: lternatives’ useful lives are…

Business

Finance

lternatives’ useful lives are different, B/C ratio analysis should preferably be based on: Select

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14MC: This calculation determines profitability or growth potential of an investment, expressed as a...

See similar textbooks

Related questions

Q: A1

A: that an investor expects while putting his investment value at stake. State of Nature…

Q: When comparing two mutually exclusive alternatives by the ROR method, if the rate of return on the…

A: Option (d) i.e. the lower first cost alternative should be selected.

Q: Which of the following is not an advantage of the average rate of return method? a.includes the…

A: Average rate of return is a method of calculating return on the asset

Q: When using present worth to evaluate the attractiveness of a single investment alternative, what…

A: To calculate the attractiveness of investment there is need to calculate the present worth is…

Q: lue (NPV) anc g decisions? Pl

A: Introduction : Net present value can be understood as the value which depicts the actual worth…

Q: The expected value, standard deviation of returns, and coefficient below.) Asset A Possible Outcomes…

A: Expected return-The expected return is calculated by multiplying the probability of each possible…

Q: This method evaluates the return of an investment by dividing the annual average income by the…

A: By dividing the annual average income by the average investment, return on investment is calculated.…

Q: The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the…

A: Based on CAPM, Expected return on security = Risk free rate + Beta * Market risk premium

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: When a firm performs an analysis to decide whether to undertake a project or not, it performs an NPV…

Q: Match each term with the best definition or descriptor. NPV is __________ ( a unitless ratio, a…

A: Solution:- Net Present Value (NPV) means the net present value of cash inflows after the deduction…

Q: Which of the following decision criteria is the easiest to use and very popular among investors?…

A: The capital budgeting process uses different methods to analyze the projects. Each method has…

Q: In calculating present value in a situation with a range of possible outcomes all discounted using…

A: Present value is the current value of a future sum of money or stream of cash flows given a…

Q: What is annual worth method, future worth method, and present worth method in comparing alternative,…

A: There are various alternatives for a project or investments that can be undertaken or chosen by the…

Q: Which one of the following is most closely related to the net present value profile? A: Payback B:…

A: The net present value method is used to evaluate the investment projects. We can evaluate the…

Q: Which of the following is NOT a profitability ratio? Select one: a. Return on Equity b. Net Profit…

Q: In Future Worth Analysis, the best alternative when there is a fixed amount of capital to invest is…

A: In future worth analysis, future value of benefits and future value of costs are calculated.

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: 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: Make a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: The expected value of an investment: Answer a. Is what the owner will receive when the investment is…

A: Expected Return refers to return anticipated by an investor while making investment. It may differ…

Q: 9% b. 20% c. 26% d. 22

A: IRR is a rate at which present value of cash inflows is equal to present value of cashoutflows.

Q: A net present worth equation is used to solve for a ROR by setting the net present worth equation…

A: ROR or rate of return of project also known as internal rate of return of project is the interest…

Q: If we define the NPV index as the ratio of NPV to cost, what is the relationship between this index…

A: In this question, we are required to determine the relationship between NPV Index and Profitability…

Q: Consider the following payoff table that represents the profits earned for each alternative (A, B,…

A: Given that A,B and C are alternatives of profit earned and S1, S2 ,S3 are states of nature .…

Q: When using annual worth to evaluate the attractiveness of a single alternative, what value is the…

A: AW (annual worth) is compared to 0.0 0.0 value is calculated for the AW(annual worth) and…

Q: A realized return is the rate of return actually earned on an investment. Group of answer choices…

A: Return: Return is defined as the money attained or lost on an investment through certain time…

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: Provide a descriptive formula for each of the following (e.g., Total risk =?+?): a. Total risk=…

Q: When comparing multiple mutually exclusive alternatives, select the alternative that __________ the…

A: When given alternatives are mutually exclusive only one can be selected because only one is needed.…

Q: When comparing multiple mutually exclusive alternatives, select thealternative that __________ the…

A: Selection of alternatives is based on future time value of money, the alternative with more net…

Q: The expected rate of return of an investment ________. a. equals one of the possible rates of…

A: Expected or average return is the return calculated by obtaining the mean value of a distribution.…

Q: There are some cases in which the present worth (( PW )) of an investment is positive while its…

A: Investments are the methods adopted by individuals and corporations for the purpose of parking or…

Question

If alternatives’ useful lives are different, B/C ratio analysis should preferably be based on:

Select one:

a. present worth

b. annual worth

c. future worth

d. ROR

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

When using annual worth to evaluate the attractiveness of a single alternative, what value is the calculated AW compared to? a. PW b. FW c. 0.0d. MARR.
When using present worth to evaluate the attractiveness of a single investment alternative, what value is the calculated PW compared to? a. 0.0b. MARR c. 1.0 d. WACC.
When comparing multiple mutually exclusive alternatives, select the alternative that __________ the annual worth. a. minimizes b. maximizes
Match each term with the best definition or descriptor. NPV is __________ ( a unitless ratio, a unit of time, a dollar vallue, or a rate of return). IRR is ___________ ( a unitless ratio, a unit of time, a dollar vallue, or a rate of return). Profitability index is __________( a unitless ratio, a unit of time, a dollar vallue, or a rate of return).
Provide a descriptive formula for each of the following (e.g., Total risk =?+?): a. Total risk= b. Discount rate= c. Adjusted NPV=
What is the difference between cumulative return and annualized return/CAGR). Provide an example
The expected value, standard deviation of returns, and coefficient o below.) \table[[Asset A],[Possible Outcomes,Probability,Returns (%)
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $306,000 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 370,000 165,760 51,000 26,000 $ 127,240
Profit volume ratio is used for the calculation of: Select one: O a. For all options provided O b. Profit at given sales O c. Profit when margin of saftey is given O d. Break even point
Which one of the following is most closely related to the net present value profile? A: Payback B: Discounted payback C: Profitability index D: Average accounting return E: Internal rate of return
Carrying amounts in a GAAP balance sheet are measured using all the following except: Multiple Choice historical cost. net realizable value. discounted present value. projected ROI.
The expected rate of return of an investment ________. a. equals one of the possible rates of return for that investment b. equals the required rate of return for the investment c. is the mean value of the probability distribution of possible returns d. is the median value of the probability distribution of possible returns e. is the mode value of the probability distribution of possible returns