Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 21, Problem 21.18MCQ
Which of the following statements is true if the
- a. The project’s
IRR is less than 5 percent. - b. The required rate of return is lower than the IRR.
- c. The NPV assumes
cash flows are reinvested at the IRR. - d. The NPV would be positive if the IRR was equal to 5 percent.
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6.Calculate the project's Modified Internal Rate of Return (MIRR). What critical assumption does the MIRR make that differentiates it from the IRR?
TIP : look for the definition of Modified Internal Rate of Return, and then do it in excel, easy !!!
Year
Net Cash flow
Future Value of Net Cash flow
0
-$20.8
example
1
$4.5
$7.97 (n=6, i=10%)=fv(.1,6,,4.5)
2
$6.3
(n=5, i=10%)
3
$5.2
(n=4, i=10%)
4
$3.9
(n=3, i=10%)
5
$2.1
(n=2, i=10%)
6
$1.3
(n=1, i=10%)
7
$0.5
(n=0, i=10%)
Sum = $XX.XX
MIRR = ( in excel ) Rate ( 7,-20.8, xx.xx)
7.Where does the value of MIRR fall relative to the discount rate and IRR?
Please answer fast please help
Which of the following statements is incorrect regarding project appraisal techniques?
At IRR, the NPV of a project is equal to 0
If the IRR of a project is 8%, its NPV calculated using a discount rate greater than 8%, will be less than 0
If the NPV of a project is greater than 0, then its PI will exceed 1.
If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash inflows
Chapter 21 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3QCh. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6QCh. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8QCh. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....
Ch. 21 - Prob. 21.11QCh. 21 - Distinguish different categories of cash flows to...Ch. 21 - Prob. 21.13QCh. 21 - How can capital budgeting tools assist in...Ch. 21 - Distinguish the nominal rate of return from the...Ch. 21 - A company should accept for investment all...Ch. 21 - Prob. 21.17MCQCh. 21 - Which of the following statements is true if the...Ch. 21 - Prob. 21.19MCQCh. 21 - Nicks Enterprises has purchased a new machine tool...Ch. 21 - Prob. 21.21ECh. 21 - Capital budgeting methods, no income taxes. Yummy...Ch. 21 - Capital budgeting methods, no income taxes. City...Ch. 21 - Prob. 21.24ECh. 21 - Capital budgeting with uneven cash flows, no...Ch. 21 - Comparison of projects, no income taxes. (CMA,...Ch. 21 - Payback and NPV methods, no income taxes. (CMA,...Ch. 21 - DCF, accrual accounting rate of return, working...Ch. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Project choice, taxes. Klein Dermatology is...Ch. 21 - Prob. 21.32ECh. 21 - Selling a plant, income taxes. (CMA, adapted) The...Ch. 21 - Prob. 21.36PCh. 21 - NPV and AARR, goal-congruence issues. Liam...Ch. 21 - Payback methods, even and uneven cash flows. Sage...Ch. 21 - Replacement of a machine, income taxes,...Ch. 21 - Recognizing cash flows for capital investment...Ch. 21 - NPV, inflation and taxes. Fancy Foods is...Ch. 21 - NPV of information system, income taxes. Saina...
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