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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Question
Chapter 21, Problem 21.8Q
To determine
Discounted Cash Flow Method:
Discounted cash flow method refers to the method to evaluate a project after considering the time value of money or discounted
To explain: Whether the given statement is correct or not.
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Students have asked these similar questions
Which of the following is NOT a limitation of the payback rule?
O It does not consider cash flows occurring after the payback period.
O Lacks a decision criterion that is economically based.
O It does not consider the time value of money.
O It is difficult to calculate.
Help pls
“Depreciation expenses have no effect on cash flows and, therefore, are not relevant in capitalexpenditure analysis.” Do you agree? Why or why not?
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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Similar questions
- One problem with free cash flow method is gives too much weight to countinung value. Do you agreearrow_forwardExplain how sunk costs and cannibalisation affect the determination of aninvestment’s incremental cash flows.arrow_forwardRelevant cash inflows and outflows in a discounted cash flow analysis are the differences in expected future cash flows as a result of making the investment. The income taxes saved as a result of depreciation deductions are relevant because they decrease cash outflows, but the depreciation itself is a noncash item. True False: Relevant cash inflows and outflows in a discounted cash flow analysis are the differences in past cash flows that resulted from making previous investments. False: neither the income taxes saved as a result of depreciation deductions nor the depreciation itself is considered relevant both B and C none of the abovearrow_forward
- In the discounted cashflow method, the discount rate is used for the following reasons EXCEPTa. it removes the timing differences of cashflows.b. it serves as the required rate of return of the asset being valued.c. it removes the expected riskiness of differing assetsd. it equalizes cash inflows to cash outflows so that the value would equal to the market value.arrow_forwardPlease double-check that this is the correct answer. Thank you.arrow_forwardwhat is the most likely fair value method to utilize the Discountd Cash Flow model?arrow_forward
- When a depreciable asset is sold, with no proceeds (i.e., sold for zero), then it can be ignored for decision making because there is by definition no impact on cash flow. Group of answer choices True Falsearrow_forwardlimitation of discounted cash flow method.arrow_forwardwhat are usefulness and weakness of discounted cash flow method?arrow_forward
- In current purchasing power technique (a) Why is it necessary to consider monetary assetsseparately from nonmonetary assets? Analyze withexamples. (b) Why does holding monetary assets lead to apurchasing power loss, but holding nonmonetary assetsdoes not lead to a purchasing power loss? Analyze withexamplesarrow_forward19. Which of the following is an appropriate cost approach for determining fair value a. Using relevant information from recent transactions. b. Using present value techniques to discount cash flows. measurements? c. Using the current replacement cost of the asset. d. Using the undiscounted cash flows from the asset. 20. Which of the following concerning inputs used in determination of fair value is/are correct? 1. Only observable inputs can be used. II. Inputs that incorporate the entity's assumptions may be used. a. I only. b. Il only. c. Both I and II. d. Neither I nor II **Please provide all computations and explanations. Thank you!!arrow_forward3. Describe the Discounted Cash Flow Method. How is this value determined, and what are the assumptions/limitations?arrow_forward
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