Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Illustrate the method of appraising capital investments?
One of the potency of internal rate of return (IRR) as a method of appraising capital investments is that it is a discounted cash flow (DCF) method and so takes account of the time value of money. It as well considers cash flows over the whole of the project life and is sensitive to both the amount and the timing of cash flows. It is preferred by a few as it offers a relative measure of the value of a proposed investment that is the method calculates a percentage that can be compared with the company's cost of capital and with economic variables such as inflation rates and interest rates.
IRR has numerous weaknesses as a method of appraising capital investments. Ever since it is a relative measurement of investment worth it does not measure the absolute increase in company value (and therefore shareholder wealth) which can be found using the net present value (NPV) method. A further problem occurs when evaluating non-conventional projects (where cash flows change from positive to negative during the life of the project). IRR may propose as many IRR values as there are changes in the value of cash flows giving rise to evaluation difficulties. There is a potential disagreement between IRR and NPV in the evaluation of mutually exclusive projects where the two methods can offer conflicting advice as which of two projects is preferable. Where there is disagreement NPV always offers the correct investment advice: IRR doesn't although the advice offered can be amended by considering the IRR of the incremental project. There are consequently a number of reasons why IRR can be seen as an inferior investment appraisal method compared to its DCF alternative NPV.
What is accumulated depreciation? Depreciation is the allocation of an initial cost over time of asset. Whereas the term accumulated depreciation is the total of all the deprec
Q. Long and short dated volatility? 1. If an investor purchase long-dated volatility as well as sells short-dated volatility then the investor is expecting a decrease in the sh
1024x768 Normal 0 false false false EN-IN X-NONE X-NONE
Q. Show the Compound Value of the Single Flow ? Compound Value of the Single Flow (Lump Sum):- The process of computing future value becomes very cumbersome if they have to be
At 31 July 2010 this instrument meets the definition of a derivative: Small or no initial investment. Its value is dependent on an underlying economic item; exchange ra
In bootstrapping method, on-the-run treasury issues are used as they are fairly priced, and there is no credit risk or liquidity risk involved. In practice observed yie
how can an operating cycle be applied to a poultry business
Determine the Limitations of trade receivable day's ratio Year-end trade receivables may not be representative of the year. Credit sales are VAT exclusive in the Incom
What is triangular arbitrage? What is a condition that will give increase to a triangular arbitrage opportunity? Answer: Triangular arbitrage is the method of trading out of th
A.I.G. is often called the largest insurance entity in the world. A.I.G.'s total assets were $860 billion on 12/31/2008 (dwarfing any other insurance entity) with 116,000 employees
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd