1. Why would the average rate of return differ from the internal rate of return on the same project? 2. What would yo...
1. Why would the average rate of return differ from the internal rate of return on the same project?
2. What would you use to evaluate an investment opportunity?
Homework Answers
1. Average rate of return is calcuted by dividing net income by average invsement whereas internal rate of return is the rate at which the present value of the cash flows is NIL. they both differ because of the 2 reasons which are as follows -
a) only net income is considered in the calculation of average rate of return whereas internal rate of return uses cash flows.
b) internal rate of return takes into account time value of money whereas average rate of return ignores it.
2. We would use internal rate of return to evaluate an investment opportunity because it uses actual cash flows instead of net income and it also gives importance to the time value of money.
Add Answer to:
1. Why would the average rate of return differ from the internal rate of return on the same project? 2. What would yo...
One definition of Internal Rate of Return for a project would be: 1. The interest rate that makes the present worth of...
One definition of Internal Rate of Return for a project would be: 1. The interest rate that makes the present worth of benefits equal to the present worth of costs. 2. The least amount of interest the company is willing to accept for a project or investment. 3. P divided by A 4. The Rate of Return on the increment between the project and the next higher one. 5. None of the above
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Falcon Freight: Falcon Freight is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $750,000. Falcon Freight has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Falcon Freight: Falcon Freight is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Falcon Freight has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000 Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project’s NPV; however, its new CFO wants to start using the...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Falcon Freight is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,450,000. Falcon Freight has been basing capital budgeting decisions on a project’s NPV; however, its new CFO wants to start using the IRR method for capital...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,450,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $900,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project’s NPV; however, its new CFO...
One definition of Internal Rate of Return for a project would be: 1. The interest rate that makes the present worth of benefits equal to the present worth of costs. 2. The least amount of interest the company is willing to accept for a project or investment. 3. P divided by A 4. The Rate of Return on the increment between the project and the next higher one. 5. None of the above
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Falcon Freight: Falcon Freight is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $750,000. Falcon Freight has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Falcon Freight: Falcon Freight is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Falcon Freight has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000 Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,450,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the...
2. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO...
Most questions answered within 3 hours.
-
iodination of vanillin
experiment
1. Briefly explain why the
iodination took place at the indicated position...
asked 10 minutes ago -
Hello, I have questions on Matlab. Let's say that I have an
equation. Signal x(t)= cos(2*pi*10*t)...
asked 7 minutes ago -
Fermentation carried out by year cells will produce
1. glucos
2. ethanol
3. phsophoglyceraldehyde
4. 36...
asked 7 minutes ago -
create a class in Java for a Plane
the class will include
String Data Fields for...
asked 9 minutes ago -
A jewellery material consists of 92.5 wt% of Au and 7.5 wt% of
Cu forming a...
asked 14 minutes ago -
A uniform magnetic field B=5.210 T is perpendicular to the plane
of the paper (into the...
asked 21 minutes ago -
A metal strip 8.80 cm long, 0.758 cm wide, and 0.594 mm thick
moves with constant...
asked 22 minutes ago -
The following 32-bit binary word written in hexadecimal format
represents a single RISC-V assembly instruction. What...
asked 25 minutes ago -
A
survey found that out of a random sample of 200 workers 168 said
that they...
asked 36 minutes ago -
Duck Dodgers hops in his spaceship and leaves the Earth at a
constant velocity of 0.6c...
asked 39 minutes ago -
Describe three
key HR functions that must be integrated into the performance
management system to support...
asked 47 minutes ago -
What is the incident wavelength in meters in IR instrument?
asked 1 hour ago