Q. How is the payback period calculated?

View solution

Q. What does a shorter payback period indicate in the Pay-back Method?

View solution

Q. What is the primary advantage of the Pay-back Method?

View solution

Q. What criterion does the Pay-back Method emphasize?

View solution

Q. What is a limitation of the Pay-back Method?

View solution

Q. What is one of the limitations of the Pay-back Method that the discounted payback period aims to overcome?

View solution

Q. What is calculated in the Simple Rate of Return method?

View solution

Q. How is the rate of return calculated in the Rate of Return on Average Investment Method?

View solution

Q. What does a higher rate of return indicate in the Rate of Return methods?

View solution

Q. What is the criterion for accepting a project in the Rate of Return methods?

View solution

Q. What does the Discounted Cash Flow (DCF) Method discount to find the net present value of inflows?

View solution

Q. What does the Net Present Value (NPV) method confirm under the Modigliani and Merton Miller assumptions?

View solution

Q. How is the Net Present Value (NPV) of a project calculated?

View solution

Q. What does a positive Net Present Value indicate according to NPV rules?

View solution

Q. What does Net Present Value (NPV) represent in terms of compensation for time and risks?

View solution

Q. What must the evaluator examine in relation to cost of capital and NPV?

View solution

Q. What is one of the major aspects to keep in mind when preparing an expected cash flow estimate for a project?

View solution

Q. Which accounting data, with historical aspects, is of little use for forecasting cash inflows?

View solution

Q. How are the calculation of expected cash flow and discount rates considered in modern financial risk management?

View solution

Q. What are the two ways to compute the present value of expected inflow in any investment plan?

View solution