What is a capital budgeting technique

Assignment Help Financial Management
Reference no: EM131053058

What is a capital budgeting technique that generates a decision rule and associated metric for choosing projects, based on the total discounted value of their cash flows?

a. Payback. b. Net present value. c. Internal rate of return d. Profitability index.

Reference no: EM131053058

Questions Cloud

Basic ethical and legal principles underlie : According to the APA 6 Publication Manual, basic ethical and legal principles underlie all scholarly research and writing. Long-standing principles are designed to achieve these goal(s):
Project under consideration has the cash flows : A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,300 1 12,300 2 15,300 3 11,300 What is the NPV for the project if the required return is 11 per..
Rewards students unevenly and encourages : Some people believe that this is more effective for learning than the grading system, which they believe rewards students unevenly and encourages a competitiveness that is counterproductive to learning.
Consultant for a new international development agency : You have been hired as historical consultant for a new international development agency known as the Klein Fund that has been formed to rectify what its founders perceive to be the past mistakes of the "shock doctrine" era from the 1970s to the ea..
What is a capital budgeting technique : What is a capital budgeting technique that generates a decision rule and associated metric for choosing projects, based on the total discounted value of their cash flows?
Enterprise application integration digital desktops : Information coming from a variety of business systems can appear on the executive desktop as a consolidated whole. Often referred to as a digital dashboard, the information contained in such a view might include the executive's schedule, current e..
Based on their total risk level : What is the correct ranking for the following stocks, highest to lowest, based on their total risk level? Night Ryder has an average return of 15 percent and a standard deviation of 35 percent. WholeMart has an average return of 13 percent and a stan..
The growth rate of industrial production-the inflation rate : Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 3%, and IR 4.3%. what is your revised estimate of the expected rate of return on the st..
List the steps in the writing process : List the steps in the writing process. With which ones are you already familiar? Which ones do you need to work on? Why?

Reviews

Write a Review

Financial Management Questions & Answers

  Percent arithmetic average return

You have found an asset with a 13.60 percent arithmetic average return and a 10.44 percent geometric return. Your observation period is 30 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years?

  Annual dividend on common stock-what is the rate of return

The Vinyard recently paid a $2.38 annual dividend on its common stock. This dividend increases at 1.75 percent per year and currently sells for $40.15 a share. What is the rate of return?

  What is maximum amount-company should pay for investment

Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Ex..

  Depreciated straight-line to zero over four-year tax life

The Market Place is considering a new four-year expansion project that requires an initial fixed asset investment of $2.8 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will have a ..

  Reason for holding cash and cash equivalents

What is the reason for holding cash and cash equivalents? And which hybrid security has special claims on a corporation's profits or incase of liquidation of corporate assets?

  Compute relevant initial outlay-capital budgeting decision

AFB, Inc. is considering replacing an old machine with a new one. Two months ago their chief engineer completed a training seminar on the new machine's operation and efficiency. The $3,000 cost for this training session has already been paid. The old..

  Calculate the average check per meal period

An owner invested $180,000 in a new family-style restaurant, of which $160,000 was immediately used to purchase equipment and $20,000 was retained for working cash. Calculate the average check per meal period that will cover all costs, including desi..

  Spot price of crude oil-what was the net convenience yield

In January 201x, the spot price of crude oil was $45.65 a barrel and the one year futures price was $56.38 per barrel. The interest rate was about 0.15 percent. What was the net convenience yield? Interpret/explain that result.

  Estimate of the firms cost of equity from retained earnings

A. Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 10.50%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 4.85% over a f..

  Corporation is evaluating the relevant cash flows

A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $2,000. ..

  What is the companys cost of preferred stock

Bosio Inc.'s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's..

  Calculate value of share of stock-investors required rate

Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: the investors required rate of return 14%. the expected level of earning at the end of the year (E1) is $5. the firm follows a policy o..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd