Demerits of profitability index method, Financial Management

Assignment Help:

Q. Demerits of profitability index method?

Demerits of PI method:-

(i) This method is complicated to understand and implement

(ii) Calculations in this method are complex.

(III) Internal Rate of return Method (IRR):- IRR method is as well known as marginal efficiency of capital, time adjusted rate of return, marginal productivity of capital and yield on investment.

Like the NPV method the IRR method as well takes into consideration the time value of money by discounting the cash flows. IRR is the discount rate at that present value of cash inflows is equal to the present value of cash outflows.


Related Discussions:- Demerits of profitability index method

George thomas, which type of financing is appropriate to each firm

which type of financing is appropriate to each firm

How do we estimate expected incremental cash flows, How do we estimate expe...

How do we estimate expected incremental cash flows for a proposed capital budgeting project? We valuate expected incremental cash flows for a proposed project by valuating the

Value of conversion benefits, Value of Conversion Benefits: Having seen...

Value of Conversion Benefits: Having seen the measure used to analyze the convertible bonds, let us now examine the merits and demerits of convertible bonds and why or why not

Reasons for time preference of money, Q. Reasons for Time Preference of Mon...

Q. Reasons for Time Preference of Money? 1) Future Uncertainties: One of the reasons for preference for current money is that there is a certainty about it whereas the future

Determine the concept of dividend yield, Dividend yield Dividend yield ...

Dividend yield Dividend yield = (Dividend per share/Market share price) x 100% Dividend yield is the cash return on the share (not whole return which is cash dividend and ca

Regular versus special redemption prices, The call prices for vario...

The call prices for various issues mentioned above are known as regular redemption prices. Point to be noted is that the regular redemption prices are above

Use of derivatives in equity portfolio management, Do you provide assignmen...

Do you provide assignment help on the topic Use of Derivatives in Equity Portfolio Management?

Determine the factors of financial risk by giving example, Determine the fa...

Determine the factors of financial risk by giving example W. T. L. Company's cost of long-term debt two years ago was 8 percent.  This 8 percent was found to represent a 4- per

Sales of the firm, The financial ratios of a firm are given:     Current ra...

The financial ratios of a firm are given:     Current ratio    =  1.33   Acid-test ratio   =  0.80   Current liabilities  = 40,000   Inventory turnover ratio = 6    What is the

Define the operating leverage effect, What is the operating leverage effect...

What is the operating leverage effect and what causes it?  What are the potential benefits and negative consequences of high operating leverage? The phrase operating leverage e

Write Your Message!

Captcha
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