Reason net income can differ from cash flows

Assignment Help Financial Management

Reference no: EM131308131

1. Which of these is a disadvantage of using the payback period as a capital budgeting tool?

It does not allow for an easy comparison across investments

It requires the calculation of different cash flows than NPV and IRR

The calculations are more complex and more difficult to explain to managers untrained in finance

This method does not take into account the time value of money

2. Which of the following is a reason net income can differ from cash flows?

Dividends are not included in net income

Selling equipment for no profit doesn’t involve cash

Depreciation is not included in net income

Earnings from bank deposits are not included in net income

Reference no: EM131308131

Questions Cloud

What is the yield to maturity of a ten-year : What is the yield to maturity of a ten-year, $1000 bond with a 5.2% coupon rate and semiannual coupons if this bond is currently trading for a price of $884? Examples of cash disbursements include all the following except:

Usually the face value of a bond is repaid at maturity : Which of the following risk-free, zero-coupon bonds could be bought for the lowest price? The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond. Usually the face value of a bond is rep..

Most inclined to issue additional debt : In which scenario should a company be most inclined to issue additional debt? Using only the information below, which company likely can produce products more cheaply than its competitors? Company A has Profit Margin of 9%, Current Assets of $300M, C..

How much money did it cost to buy these shares : You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $4.14 and $4.11, respectively. You place a market buy order for 580 shares that executes at these quoted prices. How much money did it cost to buy these..

Reason net income can differ from cash flows : Which of the following is a reason net income can differ from cash flows? Which of these is a disadvantage of using the payback period as a capital budgeting tool?

Find total annual cost of paper for webster at optimal level : The Webster Times buys 10,000 tons of newsprint annually with the following pricing structure: 1 to 99 tons $100 a ton, 100 to 300 tons $95 a ton, over 300 tons $90 a ton. The cost of capital to Webster is 14%. Find The optimal amount of newsprint th..

Discuss how bond options can be used for hedging strategies : Provide three examples of financial futures and describe how investors would use these contracts. Discuss how bond options can be used for hedging strategies.

At certain rate of interest the present values : At a certain rate of interest the present values of the following two payments are the same. At the same interest rate $1000 invested now plus $2000 invested in 5 years will accumulate to P at the end of 10 years. Find P.

What is the size of the settlement : You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already dec..

User Account

All Pages