The formula for calculating net present value (NPV) involves:a) Adding the initial investment and future cash flowsb) Discounting future cash flows to the present and subtractingthe initial investmentc) Dividing future cash flows by the initial investmentd) Multiplying future cash flows by the discount rate

Explanation of Net Present Value (NPV): NPV is a financial metric used to assess the profitability…

Answered: The formula for calculating net present…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 15MC: The IRR method assumes that cash flows are reinvested at _________. A. the internal rate of return...

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The expected period of time that will elapse between the date of a capital investment and thecomplete recovery of the amount of cash investedis called: A.The average rate of return period B.The cash payback period C.The net present value period D.The internal rate of return period
The present value of a future cash flow is computed by multiplying the future cash flow value with the: O discounting factor. O number of periods. O compounding factor. O interest rate.
Determining the future value of one or more present day cash flows is known as ________. A. disinvesting B. annuitizing C. discounting D. compounding
Which of the following methods consider the time value of money? A. payback and accounting rate of return B. payback and internal rate of return C. internal rate of return and accounting rate of return D. internal rate of return and net present value
Select all of the time value of money factors that are known in a NPV assessment. O Present value of single-sums O Present value of annuities O Interest rate Number of periods O Future value of single-sums O Future value of annuities
Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a PW value calculated at the MARR, and (2) the IROR value i*.
Which of the following is the correct definition for present value (PV)? Select one: a. The current value of the sum of all the past cash flows given a specified rate of return. b. The current value of the sum of all the future profits made by the company with a specified rate of return. c. The current value of a future sum of money or stream of cash flows given a specified rate of return. d. The future value of the sum of all the future cash flows without a specified rate of return.
Choose the correct.Determination of net present value involves: A)forecasting future profits and cash flows. B)discounting future cash flows back to their present value. C)analysis on an after-tax basis. D)All of the above
Finding the present value of future cash flows is called and finding the future value of present cash flows is called O A. analytics, tracking B. capital budgeting, short-term budgeting C. discounting, compounding D. financial ratio analysis, financial statement analysis O E. fundamental analysis, technical analysis
The rate of return that equates the present value of cash inflows and outflows is the: A. hurdle rate.B. desired rate of return.C. internal rate of return. D. minimum rate of return.
Please answer the following questions 1. _________________ is the discounted net future cash inflows divided by the initial cash outlay. a.Payback b.NRV c.Profitability Index d.IRR 2. __________________________ serves as a framework for measuring performance. a.NRV b.Payback c.Profitability Index d.Balanced Scorecard 3. Which of the following is a performance measures of the balanced scorecard: a.internal Business perspective b.all of the answers are correct c.financial Perspective d.customer perspective
Which of the following methods of capital budgeting tries to equate the present value of cash inflows to present value of cash outflows? a. Net present value b. Payback period c. Internal rate of return d. Accounting Rate of return

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