Capital Budgeting: It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company. Payback Method: Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it. Net Present Value (NPV): It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate. Internal Rate of Return (IRR): It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital. Discounted Payback Period: It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows . To identify: a . the net present value , b . payback period, c . internal rate of return d . accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

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Answer 1

Question

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

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Calm Ltd has the following data relating tò two investment projects, only one of which mayb e s e l e c t e d :The cost of capital is 10 per cent, and depreciation is calculated using straight line method.a . Calculate for each of the project:i. Average annual accounting rate of return on average capital investedi i . Net Present Valuei l l . I n t e r n a l R a t e o f Returnb. Discuss the relative merits of the methods of evaluation mentioned above in (a).Q.4a . In the context of process costing, discuss the following concepts briefly, i . Equivalent unitsNormal lossill. Abnormal lossi v. Joint productsV . By productsb . Discuss the different types of standard costing and objectives of standard costing.

Please help me correct the wrong answers:

What are total assets at the end of the year?

Answer 2

Question

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

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Answer 3

Question

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

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Answer 4

Question

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

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Answer 5

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

Answer 6

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

Answer 7

Chapter 21, Problem 21.19E

1.

To determine

Capital Budgeting:

It refers to the long term investment decisions that has been taken by the top management of a company and that are irreversible in nature. These decisions require investment of large amount of cash of the company.

Payback Method:

Payback Method refers to the method which measure the time period that is required to get an amount invested in a project with some return on it.

Net Present Value (NPV):

It is a method under capital budgeting which includes the calculation of net present value of the project in which company is investing. The calculation is done by calculating the difference between the value of cash inflow and value of cash outflow after taking into consideration the discounted rate.

Internal Rate of Return (IRR):

It refers to the rate of return that is computed by the company to make a decision of selection of a project for investment. This rate provides the basis for selection of projects with lower cost of capital and rejection of project with higher cost of capital.

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it after considering the time value of money or discounted cash flows.

To identify: a. the net present value, b. payback period, c. internal rate of return d. accrual accounting rate of return based on the net initial investment and e accrual accounting rate of return based on average investment.

Answer 8

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

Answer 9

2.

To determine

To identify: The other effect of disposable value over the values calculated in part 1.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3Q Ch. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6Q Ch. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8Q Ch. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....

To identify: The other effect of disposable value over the values calculated in part 1.

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Chapter 21 Solutions