Describe the affects of the present value of an investment.

Q: Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof…

A:

Q: what is the discounted payback period for the investment?

A: Payback Period is the calculation of periods or years within which cost of investment is recovered.…

Q: Explain several ways of defining the concept of rate of return on investment?

A: Return on investment is the tool that can be used to measure the performance of the companies.  The…

Q: present worth of this investment.

A: We can populate the cash flows as below and calculate the NPW. Pls note that 24% compounded monthly…

Q: Are there sources of value in an investment? what they are? and give an example for both?

A: Yes, there are various sources of value in an investment. An investment is a stock or a bond. People…

Q: What are the two sources of value in an investment?  Given an example of each.

A: An investment is a process where the investors gives or outlays his or her capital in return of…

Q: What are the benefits and corresponding risks of Financial Investment?

A: Financial Investments are investments that are made with the expectation to receive future financial…

Q: Why is it necessary to determine how long you can expect to reap benefit from the investment?

A: Individuals as well as firms often make investment and specify the time limit for which this…

Q: what would be the purchasing power of the total return on their investment

A: Purchasing Power: Purchasing power refers to the actual power of buying the goods of services with…

Q: What is investment decision making process ? And example

A: An investment decision refers to how a company's finances are to be invested in various assets in…

Q: What would you choose? Other investment assets or Alternatives to fixed income and equities

A: Allocation of the investment is a much wider and troublesome task. the proper allocation may lead to…

Q: why is a need for investor to evaluate the investment ?

A: All investments will have a certain percentage of risk. To control the future risks in the…

Q: ExplainValuing REITs as Investments?

A: Valuing REITs as investments: A typical way for the calculation of REIT is to find the Net asset…

Q: Do the financial statements provide the basis for future investment analysis?

A: Yes, financial statements are helpful in providing the base for the analysis of investment in the…

Q: A particular investment's rate of return is referred to as a "return on investment.

A: In response to the question The phrase "financial market" refers to items that are often seen in the…

Q: The net present value of an investment represents the difference between the:

A: The Answer :

Q: Calculate the average rate of return on the investment.

A:

Q: Discuss how the Accounting Rate of Return as an investment appraisal method is better than the Net…

A: Accounting ROR or ARR and Net Present Value(NPV) are tools that are used to make selection among…

Q: Explain the process of Return on Invested Capital?

A: It represents the amount of return earned by all the investors. It can be calculated by dividing…

Q: Explain the investment pool?

A: Investment Pool: Investment Pool is the joint funds that is planned financial arrangements for a…

Q: Determine whether an investment is visible, which factors should be considered?

A: In terms of finance, the term feasibility of a project means to check if the project is economically…

Q: Illustrate the method of investment risk: Investment?

A: Following are the methods of investment risk: Investment: Standard deviation: Standard deviation…

Q: Which are the several ways of defining the concept of rate of return on investment?

A: Answer: Return on investments is an instrument which can be used to calculate the company’s…

Q: What is the relation between the present value of an investment and time and interest rate?

A: The concept of present value of an investment and time and interest rate is an important concept of…

Q: Explain the difference between return of investment versus return on investment.

A: The ratio analysis helps to analyze the financial statements of the business.

Q: Which approach to investment analysis is "best" in terms of accounting for both the timing and…

A: Capital budgeting is a tool or technique that helps to analyze the profitability of the project.…

Q: What is the relationship of risk to the investment?

A: There is a direct relationship between risk and return in investment decision making. It means…

Q: When is a project is said to be a net investment?

A: Accounting is primarily concerned with identifying, recording, measuring, summarizing transactions…

Q: How can I calculate the NPV of an investment?

A: Net present value:- Net present value is the investment evaluation technique, where we evaluate…

Q: What is the main determinant of the level of investment?

A: An investment is simply a financial instrument formed with the goal of allowing money to grow. One,…

Q: How do you make an investment decision based on the IRR?

A: IRR is the return actually earned by the investor and discount rate is the return which the investor…

Q: What is the Capital Asset Pricing Model and explain the variables used to calculate the required…

A: The Capital asset pricing model is a model that is used for the calculation of the cost of equity of…

Q: Describe the principles of asset valuation. Distinguish between the required rate of return and…

A: Asset Valuation means that a company or business is studied to understand what will be the intrinsic…

Q: Is the investment risk concerned with the range of possible outcomes from aninvestment?

A: For a business, there are many types of risks associated with it. Some of the risks are credit risk,…

Q: Describe some of the investment strategies?

A: Investors always select investment strategies according to their suitability. Investors have…

Q: What would you choose? OTHER INVESTMENT ASSETS or ALTERNATIVES TO FIXED INCOME AND EQUITIES

A: Portfolio investments: Portfolio investment is the type of investment in which various types of…

Q: Explain the term Motivations for Investing and types of investments?

A: Making investments in securities is a good method to mobilize the savings and earn a regular source…

Q: What are the techniques used in evaluating investments? List them and explain

A: There are various techniques used in evaluating investment options.  Som of them are: 1) Net present…

Q: Describe the process of the Net-Investment Test?

A: The Net-Investment test is done to figure out if an investment is a 'Pure investment' or a 'Mixed…

Q: Define the term capital investment.

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

Q: Discuss the three components of an investor's required rate of return on an investment

A: The rate which is expected by an investor from its investment over a time period is referred to as…

Q: Discuss and evaluate the use of the payback period as an investment criterion.

A: Payback Period: It refers to the period in which a project or an investment recovers its initial…

Q: Calculate the internal rate of return of each investment opportunity. Daced

A: Internal Rate of Return(IRR) is one of the capital budgeting techniques used for finding the…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.