When using the NPV method for a particular investment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then

Q: Which of the following are correct regarding the frequency of compounding? Choose two.  A) the…

A: The compounding frequency is the number of times interest is paid out or capitalized in the account…

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: What are the two fundamental approaches to Probabilistic Cash Flow Analysis? What are its benefits?

A: The two fundamental approaches to the probabilistic cash flow analysis is shown as follows: Cash…

Q: Describe the Replacement Analysis Using the Cash-Flow approach?

A: The cash flow approach clearly reflects the real cash-flow effects for each replacement option as it…

Q: Explain the use of real and nominal discount rates in discounting cash flows. Which is used more…

A: Real Discount Rates A real interest rate is the interest rate that takes inflation into account.…

Q: When using the NPV method for a particular investsment decision, if the present value of all cash…

A: NPV stands for Net present value. It is a method used to evaluate the feasibility of the project.…

Q: how many of the following investment criteria always use all of a projects cash flows in their…

A: Project cash flows generally refers to cash amount which is generated from investment which ignores…

Q: The time value of money concept is given consideration in long-range investment decisions by  Group…

A: The time value of money concept is given consideration in long-range investment decisions by :

Q: The length of time required for an investment to generate cash flows sufficient to recover its…

A: Net Present Value It is the amount of present value of the cash inflows net of cash outflows. It…

Q: Discounting an investment’s cash flows using the internal rate of return will result in which of the…

A: Introduction: The internal rate of return (IRR) is a research and consulting metric used to assess…

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: Where is the short term investment shown in the Cash flow statement?

A: A short-term investment: It also known as a temporary investment or marketable security. It is a…

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: Cite the advantages brought about by an effective cash flow forecasting

A: The method of making an estimation or prediction of any company's projected financial situation is…

Q: All of the followings are True when the net present value method is used to choose between two…

A: Net present value is the excess of present value of cash flows over cash outflows or initial…

Q: This method solves for the interest rate that equates the equivalent worth of a project's cash…

A: Payback period -  Initial investment / Cash flow per year. It is the period taken to recover the…

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: Describe the process to find the mean and variance of the PW for the incremental cash flows?

A: Identify the Rate, project life. Then Incremental cash flows should be computed.

Q: fe of the project. Which one of the following statements is correct with respect to this…

A: NPV Method assumes that all the cash flows are reinvested at the company's Cost of Capital. IRR…

Q: A project can have as many different internal rates of return as it has: O changes in the sign of…

A: The internal rate of return (IRR) is used to measure the profitability of investments. It is the…

Q: Prepare a cashflow forecast, Use investment appraisal techniques to calculate Net Present Value…

A: Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows)

Q: How do you evaluate an asset whose value is dependent on future cash flow expectations

A: The Answer :

Q: In computing the present value of an investment in equipment, the present value of the residual…

A: Net Present value = Present value of future cash flows + Present value of terminal cash flow -…

Q: Discuss the notions of conventional and nonconventional cash flows in capital budgeting. Which…

A: Conventional Cash Flows: These are cash flows in a project where the pattern of initial investment…

Q: Explain the Incremental Cash Flows from Undertaking a Project?

A: Incremental cash flows  It is an additional amount of net cash flows produced by the project…

Q: In this method, the company compares the amount spent on the investment with the discounted expected…

A: a. Payback is the period in which the investment can break-even. b. NRV is the difference of…

Q: How are incremental cash flows found in a replacement analysis?

A: The choice to substitute an existing asset with another is defined as the net current and internal…

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: Calculate the benefit-to-cost ratio of a project that invol cash flow:

A: Calculation of Present Value Year Cashflows 1 1.09 1 110 0.917431 100.9174 2 110 0.84168…

Q: How can we compute incremental cash flow, and IRR?

A: Incremental cash flows and IRR, both are the terms of Capital Budgeting decisions. Incremental cash…

Q: Mathematically, we can determine the rate of return for a given project’s cash flow series by…

A: When Cash Flows are discounted by using Internal Rate of Return for a period of cash flows held.…

Q: Incremental cash flow is calculated as (cash flowB− cash flowA), where B represents the alternative…

A: Incremental cash flows are the cash flows that are left after meeting initial cash requirements as…

Q: What should a firm’s goal be regarding the cash conversion cycle,holding other things constant?…

A: The cash conversion cycle refers to the number of days between paying for crude materials or…

Q: How does depreciation enter into the calculation of operating cash inflows? Explain theu…

A: Depreciation allocates expenses related to assets over their useful life and it assists in reducing…

Q: Which of the following are Cash Outflows from Investing?

A: The cash flow statement shows the cash inflow and cash outflow from the operating activities,…

Q: Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash…

A: External rate of return is the return rate which is expected to be generated from the project. If…

Q: g. The amount of money today that is consider equivalent to the cash flows expected to take place in…

A: Capital budgeting is the process of making decisions in long term assets. It is the process of…

Q: The rate of return that equates the present value of cash inflows and outflows is the: A. hurdle…

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: How can we develop the cash flow series over the project life based on the assumption of most likely…

A: Below is the cash flow developed on the base of assumption:

Q: Describe the Probabilistic Cash Flow Analysis?

A: Answer: Cash flow applies to the overall sum of cash and cash equivalents that come into and out of…

Q: The ____ of an investment is the period of time for the ____ to equal the initial cash outlay.   a.…

A: The payback period refers to the amount of time it takes to recover the cost of an investment.…

Q: Define “incremental cash flow.”

A: An incremental cash flow is the additional operating cash flow that an organization receives from…

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.