Which capital budgeting projects are ?preferred اخترأحد الخیارات a. Higher payback period O b. None of the option O c. Average payback period O d. Lower payback period O e. Lower cash inflow projects O
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- Which of the following is not a capital budgeting technique? Select one: a. Net present value b. Discounted Payback period c. Payback Period d. Profitability index e. Ratio Analysis Which capital budgeting projects are preferred? Select one: a. Lower payback period b. None of the option c. Higher payback period d. Lower cash inflow projects e. Average payback periodWhich of the following is a problem with using discounted payback period for capital budgeting decisions arbitrary cutoff choice bias against short term projects in favor of long term projects time value of money conceptual violationQuestion:Describe Capital budgeting techniques with their respective strength and weakness for IRR , NPV , PI and Pay back period
- When a project results in multiple IRR's due to unconventional cash flows, which capital budgeting technique should be used? O Internal rate of return is the highest O Net present value is the highest O None of the above O Payback period is the shortest22. If a capital budgeting project’s cash flows are not normal, the internal rate of return (IRR) method should be used to make the investment decision. Group of answer choices True FalseMarginal analysis and capital budgeting decisions. A company faces the following schedule of potential investment projects (all assumed to be equal risk). Use marginal analysis to decide which projects should NOT be undertaken? Expected Rate of Return (%) Project alm|0|n|u|u A B с D E F CH G 1 Investment Required ($ million) 25 15 40 35 12 20 18 13 7 OF and G OH and I OF, G, H, and I 01 OG, H, I 27 24 21 18 15 14 13 11 8 Cumulative Investment The following is the cost of acquiring the funds needed to finance these investment projects. Cost of Capital (%) Block of funds ($ million) First 50 10 Next 25 10.5 11 Next 40 Next 50 12.2 Next 20 14.5 25 40 80 115 127 147 165 178 185 50 75 115 165 185 Cumulative Funds Raised
- Which of the following capital budgeting methods is biased against long-term projects such as research and development and new product launches? O Internal Rate of Return O Net Present Value O None of the Above O Payback PeriodIn capital budgeting, a project is accepted only if the internal rate of return equals or: a. exceeds the net present value b. is less than the required rate of return c. exceeds the required rate of return d. exceeds the accrual accounting rate of returnWhich of the projects according to capital budgeting are not selected Select one: a. Project with early discounted payback b. Project with lower Profitability index c. Project with early payback d. Project with higher Net Present value e. None of the option
- What is the most commonly used capital budgeting procedures? Select one: a. IRR b. Payback period c. Discounted Payback period d. NPV e. Profitability IndexThe Basics of Capital Budgeting: Evaluating Cash Flows: IRR A project's internal rate of return (IRR) is the that forces the PV of the expected future cash flows to equal the initial cash flow. The IRR is an estimate of the project's rate of return, and it is comparable to the on a bond. The equation for calculating the IRR is: CFt is the expected cash flow in Period t and cash outflows are treated as negative cash flows. There must be a change in cash flow signs to calculate the IRR. The IRR equation is simply the NPV equation solved for the particular discount rate that causes NPV to equal .The IRR calculation assumes that cash flows are reinvested at the . If the IRR is than the project's cost of capital, then the project should be accepted; however, if the IRR is less than the project's cost of capital, then the project should be . Because of the IRR reinvestment rate assumption, when projects are evaluated the IRR approach can lead to conflicting results from the NPV method.…F. All choices are incorrect -When a capital budgeting project generates a positive net present value, this means that the project earns a return higher than the: A. Required rate of return B. Internal rate of return. C. Annual rate of return. Present value D. E. All choices are incorrect the following net cash flows