Explain why the NPV of a relatively long-term project, defined as one for whicha high percentage of its cash flows are expected in the distant future, is moresensitive to changes in the cost of capital than is the NPV of a short-term project

Q: Net Present Value You are evaluating two projects, Project A and Project B . Project A has a short…

A: Net Present Value(NPV) of a project is equivalent to the difference of the cash inflows present…

Q: A project's IRR: A) All of these answers are correct. B is the average rate of return necessary to…

A: IRR is the rate that would result in net present value of future cash flows equal to exactly Zero.

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: 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: Is it worth the effort to estimate daily project cash flows?  Would doing so be helpful in the…

A: Cashflows are usually estimating yearly and then discounted at an appropriate discount rate

Q: Payback period is the time in which the initial cost of an investment is expected to be recovered…

A: The payback period is the time it takes to repay the cost of an investment or to reach the breakeven…

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: What are the advantages of using the NPV method of assessing capital budgeting projects over the Pay…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

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: A rate of return is... O A. the return which is required for an investment O B. the current worth of…

A: Solution:- Rate of return means the rate at which the investor wants the return.

Q: 1. Which of the following is not true? Group of answer choices The method in which we calculate a…

A: Capital Budgeting techniques and methods are used to measure and evaluate the potentiality of…

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: How many of the following investment criteria always use all of a project's cash flows in their…

A: Capital budgeting techniques are used to determine whether the projects undertaken are profitable to…

Q: How can the money released from a project be reinvested to yield a rate of return equal to that…

A: A rate of return can provide brokers and investors key data for future trades or investments. The…

Q: True or false? One way to address risk for a capital budgeting problem is to conduct scenario…

A: Capital budgeting plays a pivotal role in determining the feasibility and profitability of long-term…

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: need answer step by step

A: The correct answer is D. If the NPV of the project is positive, the IRR must be higher than the…

Q: Suppose a project has an IRR below the cost of capital. What can you say about the project's NPV? O…

A: The net present value (NPV) is found by subtracting a projects initial investment from the present…

Q: Depending on the cash flow assumption, should the project must use continuous cash flow? why?

A: In continuous discounting and continuous cash flows, the assumption is that the cash stream happens…

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: Which of the following should you focus when assessing the NPV of a project for a MNC? I.…

A: Net Present Value (NPV) is the technique of capital budgeting which defines the profitability of the…

Q: How long will it take to save $2581.00 by making deposits of $227.00 at the end of every month into…

A: Amount to be saved is $2581.00 Interest rate is 7% compounded monthly Monthly deposit $227 To Find:…

Q: Why do we need to predict how certain costs will behave in response to change activity in project…

A: Cash flow analysis is the way by which financial health of the company can be checked. In this…

Q: The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate…

A: MIRR refers to modified internal rate of return. MIRR, as a capital budgeting tool, seeks to remove…

Q: Under what circumstances the cross over rate will be an important point in capital budgeting. Can it…

A: Capital Budgeting is a process in which the company decided on the project investments which would…

Q: If the net present value of a project is positive, the project earns a return that is Group of…

A: Introduction: According to the net present value rule, executives and shareholders must only invest…

Q: Debt service coverage ratio (DSCR) is a measure used to determine the project's ability to cover its…

A: Debt service coverage ratio (DSCR) is a measure used to determine the project's ability to cover its…

Q: What is a capital budgeting technique that generates decision rules and associated metrics for…

A: The capital budgeting technique help to evaluate the acceptibility and rejection of a particular…

Q: When the present value of the cash inflows exceeds the initial cost of a project, then the project…

A: If present value of cash inflows exceeds the initial cost of a project, then NPV of the project will…

Q: Mathematically, how can we determine the rate of return for a project's cash flow?

A: IRRIt is the capital budgeting technique of discounted cash flow which gives a rate of return being…

Q: How can we predict the future cash flows in a project?

A: Cash flows refer to the amount of net cash and cash equivalents that flow in and out of the…

Q: entify if each of the following would be included or excluded in forecasting cash flows for a…

A: When forecasting future cash flows only those cash flows, which will incur in future [ incremental ]…

Q: The payback period is a non - discounted cash flow technique that measures: a. The time required to…

A: The payback period is a financial metric used to evaluate the time it takes for an investment to…

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

A: Conventional cash flow is a cash flow in which an investment or project has an initial cash outflow…

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.