Why does a project not merit consideration unless its payback period is shorter than some special period of time?

Q: Which of the following is an advantage of using the payback period method for project selection?…

A: The objective of the question is to identify the advantage of using the payback period method for…

Q: The equivalent annual cost for the project is incorrect. What's the correct answer?

A: Equivalent Annual Cost (EAC) is a financial metric used to compare the costs of different investment…

Q: Is the project viable or not? Suggest reasons

A: The viability of a project is examined in a feasibility study to ascertain the likelihood of…

Q: How can we Evaluate a Single Project: For a simple investment?

A: Following are the ways in which a single project can be evaluated: Present worth: Present worth is…

Q: How can you know whether a project will be profitable? What purpose does TCO serve?

A: The management evaluates the project before accepting the project, the management has to decide…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: Explain in which situation is the life of the proposed project is perpetual?

A: Perpetual projects are those projects whose life is not defined. These types of projects can go on…

Q: What happens if the payback period is within the acceptable range?

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

Q: Which is the most efficient analysis method used to determine the project acceptability on an…

A: Present worth is a financial identicalness approach in which incomes of a venture are estimated at…

Q: What are the Effects of Inflation on Projects with Depreciable Assets?

A: Answer: A depreciable asset is nothing a property that gives more economic benefit over a tax period…

Q: How can we determine the non-recurring costs such as capital expenditure and residual value at the…

A: Non-Recurring Costs: These are the cost that does not re-occur or occur again and again in the usual…

Q: What are the major reasons to request a capital project?

A: Expansion and Growth: Companies often undertake capital projects to facilitate expansion and growth…

Q: How long would it take to recover the initial investment?

A: Initial investment- It refers to the total cash expenditure on a capital of a project of the…

Q: Explain Project Feasibility and Profitability?

A: It is a study containing an itemized portrayal of the project, trailed by a lot of various…

Q: How can the calculation of Net Income Attributable be done to a new project?

A: The question is based on the concept of Net Income Attributable for new projects.

Q: What factors verify that the project is marginally acceptable?

A: Capital budgeting decisions are generally taken for long-term purposes that are irrevocable.…

Q: Why do u think it is impotant to allow funding for maintainance and extensions and not only the…

A: The objective of the question is to understand the importance of allocating funds for maintenance…

Q: If the decision is made by choosing the project with the higher IRR, how much value will be forgone?

A: Data collected from main section: IRR of project S = 17.38% IRR of project L = 14.72%

Q: How can break-even analysis be helpful in evaluating project risk

A: Break even analysis helps us in determining that level of sales at which the company is at a point…

Q: f the projects are mutually exclusive, highest payback period project will accept normally. a. True…

A: Payback period is the time it takes to recover the cost of an investment

Q: How can we consider the information for a typical investment project with a service life?

A: Computation of the interest rate can be done by considering the information available for the…

Q: In which situation are the project lives unequal?

A: Answer: A business will face a situation where multiple capital projects display a positive net…

Q: How can we determine the Incremental Analysis for Cost-Only Projects?a

A: Answer: In capital budgeting, incremental analysis is one of the most common decision making methods…

Q: Determine the period necessary to recover both the capital investment and the cost of funds required…

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

Q: According to the Discounted Payback method, which project should be selected? What is the chief…

A: According to the given information, Project D is said to have lesser discounted payback period…

Q: How can we calculate the terminal project balance of the Project?

A: Firms always invest a huge amount in starting the project and from that project they generate…

Q: When is a project in Need for an External Interest Rate?

A: When net cash flow that is generated by the project during the project’s life is reinvested, then…

Q: Which of the following is not a criterion that is used to determine whether a project is acceptable…

A: A project is accepted when NPV is greater than or equal to zero. If NPV is Negative then the project…

Q: The internal rate of return (IRR) is the: Multiple Choice discount rate that results in a zero net…

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…