The firm should accept a project if: the profitability index is greater than or equal to 1. the payback period is less than the life of the investment. the internal rate of return is positive. the internal rate of return is greater than the accounting rate of return.

Q: If a project has a higher proportion of fixed to variable costs, holding the risk of its revenues…

A: A project consists of fixed as well as variable costs. Fixed costs remain fixed all the time,…

Q: How can we use the internal rate of return to evaluate whether we should pursue a specific project?…

A: It is important for the investors to evaluate the project in all aspects before making any…

Q: When do the firm expect to recover the initial investment?

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

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: The general decision rule in Internal Rate of Return (IRR) is; Group of answer choices Accept…

A: solution concept If the IRR is greater than the cost of capital the project shall be accepted If the…

Q: Expected value of profit Standard deviation of profit Coefficient of variation of profit Project A…

A: Standard deviation is absolute measure of risk. Higher the standard deviation, higher the risk.…

Q: The cost of capital is: the required rate of return for new projects that have risk that is similar…

A: Cost of capital is required return used in capital budgeting decisions.

Q: If you perform a NPV analysis on a perspective investment using a "d" = 15% and:       a. the…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: If a firm uses its weighted average cost of capital (WACC) as the discount rate for all of the…

A: I. Because in case WACC calculation we only consider cost of debt, tax benefit , cost of equity and…

Q: We should accept a project if the Net Present Value is positive and the Internal Rate of Return is…

A: Net present value is referred as the difference between the cash inflow's present value and also…

Q: Group of answer choices a. The payback period is the present value factor for the IRR. b. A project…

A: Introduction : The payback period refers to the time period it takes for a company to recover its…

Q: WACC is only an appropriate discount rate for a project of average risk—in other words, a project…

A: According to bartleby guidelines,  if multiple questions are asked, then 1st question needs to be…

Q: ve determined the profitability of a planned project by finding the present value of all the cash…

A: Present value of cash flow is related to the discount rate and the period of cash flow of the…

Q: Check all that apply: Owhen IRR is positive, the project is acceptable when profitability index is…

A: IRR is the internal rate of return at which present value of cash flow is equal to initial…

Q: Which of the following statements is false? (You may select more than one answer.)a. The payback…

A: Cash payback method: Cash payback period is the expected time period which is required to recover…

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: 1. Simulation analysts uses best- and worst case scenarios to determine the most likely outcome 2.…

A: The first statement is false. Simulation analysts use best- and worst-case scenarios to understand…

Q: Which one of the following statements is correct? The net present value is a measure of profits…

A: Net present value (NPV) is a financial metric used to evaluate the profitability of an investment or…

Q: Which of the following is true about the WACC? It’s the appropriate discount rate for all new…

A: Solution:- Weighted Average Cost of Capital (WACC) means the minimum rate of return required by the…

Q: A firm has two potential investment projects. The project information is summarised in the table…

A: Standard deviation of project A = 175 Standard deviation of project B = 370 Coefficient of variation…

Q: Suppose a firm uses a constant WACC in determining the value of capital budgeting  projects rather…

A: WACC is the weighted average return that a company pays over all its assets. The WACC of a company…

Q: There Is no correlation between net present value and Internal rate of return. A project with a…

A: Net present value that is NPV difference between present value of cash flow and initial investment.…

Q: Assume that the firm has established a single interest rate for project evaLuation. considering all…

A: Firms always analyze the projects to check their viability because they are going to spend a huge…

Q: With everything else held constant, which of the following events should increase the internal rate…

A: IRR refers to internal rate of return. It is the rate at which net present value of a project is…

Q: If you could only have one piece of information to help you understand the discount rate for…

A: When evaluating a project with a different systematic risk than the firm overall, understanding the…

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

A: NPV is the net present value of a project. When the net present value of a project is positive in…

Q: True or False  A project will have multiple internal rates of return if its future net cash flows…

A: Internal rate of return (IRR) is the annual rate of return which is anticipated from the cash flows.…

Q: Which of the following statements is incorrect? If a firm's target average accounting return is…

A: 1) Average accounting return is the average net profit divided by the average book value of the…

Q: Consider the following statement: In a capital rationing problem withdivisible investments, if all…

A: Capital rationing is a technique used in capital budgeting to maximize profitability by restricting…

Q: . In the context of capital budgeting, what is an opportunity cost?

A: As per guideline, if more than 1 question asked I can solve only first question Please repost the…

Q: For a typical project evaluation with initial investment at time=0 and positive cash flows…

A: Net Present Value is used to analyze the profitability of a projected investment and it is defined…

Q: Coefficient of variation of Which project has a lower absoute risk level which project project would…

A: Standard Deviation: It is a measure of absolute risk for the investment. Greater the standard…

Q: Calculating the payback time is the most precise technique to determine the profitability of an…

A: Payback technique helps us to compute the time period in which the project's cash inflows cover the…

Q: What should a manager do with a project that has two internal rates of return (IRRs)? O a. Do the…

A: IRR, or Internal Rate of Return, is a financial metric used to determine the profitability of an…

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: . If NPV is negative, company usually rejects the project. While, if ARR is greater than cost of…

A: Capital budgeting comes under the domain of corporate finance. The accounting and finance principal…

Q: the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: If you have a project combined with above-average market risk, which one of the following decisions…

A: WACC is the average rate cost of capital calculated by multiplying the cost of funds by its weight.…

Q: What is the ditterence between NPV and IRR? Which is the best method corporate companies adapt…

A: Capital budgeting is a crucial process for corporate companies when evaluating investment projects.…

Q: Which of the above statements are correct?

A: Net Present Value: It is the present value of the annual cash flows and the initial cost of the…

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.