Assume a project has normal cash flows (i.e. the initial cash flow is negative and all other cash flows are positive). Which of the following statements is most correct? All else equal, a project’s IRR increases as the cost of capital declines. All else equal, a project’s NPV increases as the cost of capital declines. All else equal, a project’s MIRR is unaffected by changes in the cost of capital. None of the above

Q: Breakeven cash inflow refers to ________.   the minimum level of cash inflow necessary for a…

A: Net present value is one of the discounted techniques of capital budgeting which is used to measure…

Q: Assume that both Projects A and B have normal cash flows, with one outflow followed by a series of…

A: IRR(Internal ROR) is the rate at which NPV(Net Present Value) of a project is zero. At IRR, PV of…

Q: A project is accepted if, Net present value of the project is positive. IRR is lower than cost of…

A: Net Present Value method is used to ascertain whether the proposal should be selected or rejected…

Q: Help question 20

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Q: What are the reinvestment rate assumptions for the NPV and the IRR? A.IRR: Risk Free Rate NPV:…

A: Introduction: This question is related to the concept of capital budgeting. It is nothing but an…

Q: If a project with conventional cash flows has an IRR equal to the required return, then: O The…

A: IRR is the actual rate of return earned on the project while the required return is the discount…

Q: Assume a project has normal cash flows. All else equal, which of the following statements is…

A: The correct answer is option (e).   The weighted average cost of capital includes the cost of…

Q: Describe how NPV is calculated and describe the information this measure provides about a sequence…

A: NPV net present value is very important factor in deciding the feasibility analysis of projects. It…

Q: What will be the effect of correcting for this error on the NPV and IRR figures?

A: IRR is actually the acronym of the internal rate of return which is the rate which is determined so…

Q: f a project's cash flows are discounted at the internal rate of return, the NPV will always be…

A: Internal rate of return is the rate at which present value of cash inflows is equal to present value…

Q: . If a capital budgeting project’s cash flows are not normal, the internal rate of return (IRR)…

A: SOLUTION- INTERNAL RATE OF RETURN- IT IS A DISCOUNT RATE THAT MAKES THE NET PRESENT VALUE OF ALL…

Q: Why the payback method is often considered inferior to discounted cash flow in capital investment…

A: Payback period is capital budgeting technique which tells how much time will it take for Ann…

Q: Is it always necessary to adjust projects’ cash flows when different projects haveunequal lives?…

A: EAA or Equivalent annual annuity is a methodology utilized in capital budgeting to pick between…

Q: Why is it not always possible for the cash borrowed (released) from a project to be reinvested to…

A: We need to use the concept of capital budgeting and internal rate of return to answer the question.

Q: You have determined the profitability of a planned project by finding the present value of all the…

A: We determine the profitability of project by discounting the future cash flows with appropriate…

Q: Methods that ignore the time value of money in capital investment appraisal include which of the…

A: Net present value – Net present value is the difference between present value of cash inflows of…

Q: True or False  A project will have multiple internal rates of return if its future net cash flows…

A: Internal rate of return (IRR) is the annual rate of return which is anticipated from the cash flows.…

Q: An investment is guaranteed to have a unique value of IRR if which of the following is true? a.…

A: Given: The unique IRR value in the investment.

Q: 20. Which of the following statement is CORRECT? Assume that the project being considered has normal…

A: The question pertains to the capital budgeting tool of IRR. IRR is the internal rate of return. It…

Q: Two projects, A and B, are analyzed using ranking present worth analysis with MARR at i%. It is…

A: Cash flow is the amount of cash equivalent that the company gets or receives or gives out through…

Q: Which of the following statements is false? The NPV and IRR always provide the same accept/reject…

A: The IRR is the rate of return at which the present value of the future cash flows is equal to the…

Q: 1) In IRR method the cash flows from a project are reinvested at the cost of capital. II) IRR is the…

A: Answer is A. III and I   Explanation- I) In IRR method the cash flows from a project are reinvested…

Q: When the present value of the cash inflows exceeds the initial cost of a project, then the project…

A: If present value of cash inflows exceeds the initial cost of a project, then NPV of the project will…

Q: Devril plc is considering the investment in a project that has an initial cash outlay followed by a…

A: IRR( internal rate of return) = it is a discount rate at which net present value of future cash…

Q: tively rapidly will be more sensitive to changes in the discount rate than the NPV of a project…

A: Net present value is the difference between the present value of cash flow and initial investment.

Q: Explain why the NPV of a relatively long-term project, defined as one for whicha high percentage of…

A: NPV of a project is determined as below: NPV=PV of Cash Inflows -Initial OutlayPV of Cash…

Q: If a firm has only independent projects, a constant WACC, and projects with normal cash flows, the…

A: This declaration is valid because of the reasons why it is possible to approve or deny individual…

Q: Which of the following statements is CORRECT?

A: Net Present Value (NPV) Net Present Value method is a discounting cash flow technique used in…

Q: Why do NPV method and the IRR method sometimes give different rankings of mutually exclusive…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: Which of the following statements related to the internal rate of return (IRR) are correct? I. The…

A: All Four options are correct.

Q: ) IRR may produce multiple rates of return when cash flows are non-conventional. B) IRR is best used…

A: Internal Rate of Return(IRR) is a financial metric for cash flow analysis that compares investments…

Q: Discuss the following statement. A manager believes that changes in NWC can be ignored from your…

A: Net working capital means difference between the current assets and current liabilities.

Q: The profitability index O will never be greater than 1. O does not take into account the discounted…

A: The profitability index helps to compare the project. It measure the attractiveness of the project.…

Q: Which of the following statements is true about the internal rate of return?   a. It is the…

A: The internal rate of return is a financial measure used to measure the attractiveness of a…

Q: All else being equal, a company would choose to invest in a capital asset if which of the following…

A: Answer: If the expected accounting rate of return is greater than the required rate of return.

Q: ssume a project has normal cash flows. All else equal, whic llowing statements is correct? A…

A: The pay back period is the amount of time required to recover the initial amount of investment and…

Q: Which of the following statements is most correct? If a project’s internal rate of return (IRR)…

A: SOLUTION-   EXPLANATION- IF IRR OF ANY INVESTMENT PROPOSAL IS MORE THAN ITS COST TO FINANCE CAPITAL…

Q: When a capital investment is expected to provide unequal annual cash inflows, the payback period…

A: Payback period: It can be defined as the time that investment takes before it starts generating…

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.