Based on the below options, which one of the investment (capital budgeting) criteria does not consider the time-value of money? A. NPV Rule B. IRR Rule C. Rate of Return Rule D. Payback Rule
Added by Matthew H.
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Step 1: The time-value of money refers to the concept that money available today is worth more than the same amount of money in the future, due to its potential earning capacity and inflation. Show more…
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Which of the following statements about the payback period method of investment appraisal is true? The method Select one: a. Depends on the cost of capital of the company b. Considers the time value of money c. Is a measure of an investment's profitability d. Does not consider all of the net cash flows for an investment
Adi S.
1. Which of the following element/s should be considered when evaluating capital budgeting decision rules? A. Time value of money B. Adjustment for risk C. Creating value for the firm D. All of the above 2. Which of the following statement is NOT true about Net Present Value decision rule? A. If the NPV is negative, reject the project B. A positive NPV means the project will increase the wealth of the owners C. If there is a conflict result between NPV and IRR, always follow IRR D. NPV rule take into consideration of the time value of money 3. The ________ measures the time to get the initial cost back. A. Internal Rate of Return B. Net Present Value C. Payback period D. Profitability Index 4. What is/are the advantage/s of Payback method? A. Easy to understand B. No adjustment for uncertainty of later cash flows C. Ignores the time value of money D. Biased again short-term project 5. The main difference between Payback and Discounted Payback is: A. Discounted Payback accounts for the time value of money and Payback does not B. Discounted Payback accounts for the risk of the cash flows and Payback does not C. Only Payback does not provide an indication about the increase in value D. Both A and B
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In computing the NPV of a capital budgeting project, one should NOT: Select one: A. estimate the cost of the project. B. discount the future cash flows over the project's expected life. C. ignore the salvage value. D. make a decision based on the project's NPV.
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