The payback period rule quizlet

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MGMT 310 - Chapter 9 and 10 Homework Questions Flashcards

WebbThe payback period rule _____ a project if it has a payback period that is less than or equal to a particular cutoff date. a. suggests accepting b. suggests rejecting negative By ignoring time value, the payback period rule may incorrectly accept projects with a ___________ … WebbThe Discounted Payback Period Rule states that a company will accept a project if: A. The calculated payback is less than three years for all projects. B. The calculated payback is … song of our lady of guadalupe

Chapter 6 - Investment decisions - Capital budgeting

WebbWhich of the following investment rules does not use the time value of money concept? A. Net present value B. Internal rate of return C. The payback period D. Profitability index, 2. … Webb14 mars 2024 · The Payback Period shows how long it takes for a business to recoup an investment. This type of analysis allows firms to compare alternative investment opportunities and decide on a project that returns its investment in the shortest time if that criteria is important to them. WebbThe number of periods necessary to repay the original investment is the: a. payback. b. discount factor. c. accounting rate of return. d. time value of money. View Answer An investment project... smallest samsung american fridge freezer

How do you calculate the payback period? AccountingCoach

CHAPTER 5 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA

WebbStudy with Quizlet and memorize flashcards containing terms like The basic NPV investment rule is:, The present value of all cash flows after the initial investment is … Webb2 juni 2024 · Payback period calculates a period within which the project’s initial investment is recovered. The criterion for acceptance or rejection is just a benchmark decided by the firm, say 3 Years. If the PBP is less than or equal to 3 Years, the firm will accept the project and else will reject it. There are two major drawbacks to this … song of nuthatch birdWebbDisadvantages of the payback method: · It ignores the timing of cash flows within the payback period, the cash flows after the end of payback period and therefore the total project return. · It ignores the time value of money. This means that it does not take into account the fact that $1 today is worth more than $1 in one year's time. smallest sailboat to cross the atlantic

"WebbPayback period the amount of time required for an investment to generate cash flows sufficient to recover its initial cost. Based on the payback rule, an investment is … " - The payback period rule quizlet

The payback period rule quizlet

WebbThe Net Present Value (NPV) Rule Calculating NPV with Spreadsheets 7.2 The Payback Period Method The Payback Period Method 7.3 The Discounted Payback Period 7.4 Average Accounting Return Average Accounting Return 7.5 The Internal Rate of Return Internal Rate of Return (IRR) IRR: Example NPV Payoff Profile Calculating IRR with … Webbof Capital Budgeting eFinanceManagement com. Capital Budgeting Flashcards Quizlet. Capital Budgeting Definition from ... are the payback period net present value NPV method and the internal rate ... June 18th, 2024 - Competitiveness By applying capital budgeting decision rules in selecting the most viable project to undertake you can raise ...

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Webb17 dec. 2024 · Since the payback period does not reflect the added value of a capital budgeting decision, it is usually considered the least relevant valuation approach. However, if liquidity is a vital ... WebbThe Payback Period Rule states that a company will accept a project if: A. The calculated payback is less than three years for all projects. B. The project stays within budget. C. The...

Webbis the length of time required for an investment's discounted cash flows to equal its initial cost. Profitability Index. is equal to the present value of an investment's future cash … WebbStudy with Quizlet and memorize flashcards containing terms like What is the payback period for the following set of cash flows? Year Cash Flow 0 -$ 5,700 1 1,350 2 1,550 3 …

Webb18 juni 2024 · The discounted payback period is a capital budgeting method used to calculate the time period a project will take to break even and recover the initial investments. The calculation is done after … Webb43) The NPV rule is preferred to the discounted payback period as a project evaluation criterion because the discounted payback period rule ignores: I. The initial cost II. The timing of cash flows prior to the discounted payback period III. Any cash flows beyond the discounted payback period. a) III only b) I and II only c) I and III only d ...

Webb31 maj 2024 · The internal rate of return (IRR) estimates the profitability of potential investments using a percentage value rather than a dollar amount. It is also referred to as the discounted flow rate of...

WebbStudy with Quizlet additionally memorize flashcards containing terms fancy Suppose your firm is given investing inside a project includes the cash processes illustrated below, that the required rate are go on projects away this risk classic is 8 percent, and so the maximum allowable payback and discounted return statistic for the undertaking are 3 plus 3.5 … smallest sailboat to cross atlanticWebbAn investment is acceptable if the payback period: is less than some pre-specified period of time. The length of time required for a project's discounted cash flows to equal the … smallest sailboat to sail around the worldWebbför 2 dagar sedan · The payback period can be found by dividing the initial investment costs of $100,000 by the annual profits of $25,000, for a payback period of 4 years. Function of Discounted Payback Period. smallest saltwater tank you can haveWebbThe payback method: A) determines a cutoff point so that all projects accepted by the NPV rule will be accepted by the payback period rule. B) determines a cutoff point equal to the point where all initial capital investments have been fully depreciated. C) requires an arbitrary choice of a cutoff point. smallest samsung washer and dryerWebb20 sep. 2024 · The discounted payback period is a capital budgeting procedure used to establish the profitability of a project. smallest sailboat with wheel steeringWebb1) NPV 2) Payback period 3) Discounted payback period 4) Average Accounting Return 5) Internal Rate of Return 6)Modified internal rate of return 7) Profitability index **know … smallest saltwater fish tankWebbTerms in this set (10) The payback rule is based on the idea that an opportunity that pays back its initial investment quickly is a worthwhile opportunity. The internal rate of return … smallest sailboat winch