A capital budgeting technique that can be computed by solving for the discount rate that equates...
A capital budgeting technique that can be computed by solving for the discount rate that equates the present value of a project's inflows to the present value of its outflows is called internal rate of return.
True
False
Homework Answers
| TRUE |
| A capital budgeting technique that can be computed by solving for the discount rate that equates the present value of aproject's inflows to the present value of its outflows is called internal rate of return. |
| Internal rate of return is the discount rate at which a project's net present value is zero. |
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A capital budgeting technique that can be computed by solving
for the discount rate that equates...
A capital budgeting technique that can be computed by subtracting a project's initial investment from the...
A capital budgeting technique that can be computed by subtracting a project's initial investment from the present value of its cash inflows discounted at a rate equal to a firm's cost of capital is called net present value. ture or false
True or false and why? 5. The internal rate of return (IRR) is such a discount...
True or false and why? 5. The internal rate of return (IRR) is such a discount rate that ensures the sum of present value of the cash outflows (or costs) with the sum of future value of the cash inflows. 6. A basic rule in capital budgeting is that if a projects NPV is larger than or equal to its IRR, then the project should be accepted.
The internal rate of return is defined as the: A. discount rate that causes the profitability...
The internal rate of return is defined as the: A. discount rate that causes the profitability index for a project to equal zero. B. discount rate which equates the net present value of cash inflows to the net present value of cash outflows to zero. C. maximum rate of return a firm expects to earn on a project. D. rate of return a project will generate if the project in financed solely with internal funds.
The internal rate of return (IRR) is such a discount rate that ensures the sum of...
The internal rate of return (IRR) is such a discount rate that ensures the sum of present value of the cash outflows (or costs) with the sum of future value of the cash inflows True or False
You are a financial analyst for the Brittle Company. The director of capital budgeting has asked...
You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects' expected net cash flows are shown in the table below. Expected Net Cash Flows Year Project X Project Y 0 – $10,000 – $10,000 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000...
1. A capital budgeting project is acceptable if the rate of return required for such a...
1. A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return. True False
Select the correct term for each of the following descriptions Hint: These are not necessarily complete...
Select the correct term for each of the following descriptions Hint: These are not necessarily complete definitions, but there is only one possible description for each term Descriptions Terms This value is calculated by summing a project's expected annual cash inflows until their cumulative value equals the project's initial cost. Capital budgeting This analysis involves a comparison of the expected and actual results for a given capital project and the development of an explanation for any disparity between them. Independent...
A project's is computed as the present value of project related cash inflows and outflows. Select...
A project's is computed as the present value of project related cash inflows and outflows. Select one: O A. internal rate of return B. net present value C. present value index O D. accounting rate of return
Match each capital budgeting method with its definition METHODS 1. Accounting rate of retur 2 Internal...
Match each capital budgeting method with its definition METHODS 1. Accounting rate of retur 2 Internal rate of return 3. Net present value 4. Payback DEFINITIONS is only concerned with the time i&takes to get cash outflows retuned b. Considers operating income but not the time value of money in its analyses. Companes the present value of cash outflows to the present value of cash infiows to determine investment worthiness d. The true rabe of return an investment earns
Question 4 (1 point) 1. A capital budgeting project is acceptable if the rate of return...
Question 4 (1 point) 1. A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return. True False
1. A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return. True False
Select the correct term for each of the following descriptions Hint: These are not necessarily complete definitions, but there is only one possible description for each term Descriptions Terms This value is calculated by summing a project's expected annual cash inflows until their cumulative value equals the project's initial cost. Capital budgeting This analysis involves a comparison of the expected and actual results for a given capital project and the development of an explanation for any disparity between them. Independent...
A project's is computed as the present value of project related cash inflows and outflows. Select one: O A. internal rate of return B. net present value C. present value index O D. accounting rate of return
Match each capital budgeting method with its definition METHODS 1. Accounting rate of retur 2 Internal rate of return 3. Net present value 4. Payback DEFINITIONS is only concerned with the time i&takes to get cash outflows retuned b. Considers operating income but not the time value of money in its analyses. Companes the present value of cash outflows to the present value of cash infiows to determine investment worthiness d. The true rabe of return an investment earns
Question 4 (1 point) 1. A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return. True False
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