Describe the capital budgeting

Assignment Help Finance Basics

Reference no: EM1311131

Capital Budgeting

1. Some firms use the payback period as a decision criterion or as a supplement to sophisticated decision techniques because

a. it can be viewed as a measure of risk exposure

b. It explicitly considers the time value of money

c. the determination of payback is an objectively determined criteria

d. it can take the place of the net present value approach

2. When the net present value is negative, the internal rate of return is ______ the cost of capital

a. a greater than

b. greater or equal to

c. less than

d. equal to

3. The _____ is the discount rate that equates the present value of the cash inflows with the initial investment

a. a payback period

b. average rate of return

c. cost of capital

d. internal rate of return

4. The average of using simulation in the capital budgeting process is

a. ease of calculation

b. the availability of a continuum of risk-return trade-offs which may be used as the basis for decision making

c. dependability of predetermined probability distributions

d. that it generates a continuum of risk-return tradeoffs rather than a single point estimate

5. The _______ is the exact amount of time it takes the firm to recover its initial investment

a. a average rate of return

b. internal rate of return

c. net present value

d. payback period

Reference no: EM1311131

Questions Cloud

Finding opportunity cost and comparative advantage : According to law of comparative advantage , who should produce wheat and who must produce Cd palyer? Evaluate all relevant opportunity cost.

Experiencing the experimental manipulation : The logic of an experiment is which when one group that experiences the experimental manipulation and other group do not, any differences in subsequent behavior are due to independent variable. This conclusion is true when:

Evaluation of a cost charged to a project : Calculation of a cost charged to a project - How much Logistics Department cost should be charged to the Atlantic Division at the end of the year for performance evaluation purposes

Changes in equilibrium price and quantity : Use diagram to describe how each of the following events affects the equilibrium price and quantity of pizza (draw a separate diagram for each event)

Describe the capital budgeting : Describe the Capital Budgeting and what is the average of using simulation in the capital budgeting process is

Enhance company''s financial performance : Show Which alternative would most likely enhance this company's financial performance, overall

Attention deficit hyperactivity disorder : Researchers have discovered that children experiencing Attention Deficit Hyperactivity Disorder (ADHD) show improvements if they attend classes on involving behavioral and social skills

Find the lowest transfer price : Calculation cost to make a product - Evaluate the lowest transfer price the Parts Division would accept for Product A?

Pricing decision on the basis of elasticity of demand : A tariff I ssimply a tax on imports. Use our model of the excise tax (with diagram) to expain why domistic firms request that tariff? Consider both the domestic and the foreign country in your answer

User Account

All Pages