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2 years ago

Which methods of evaluating a capital investment project use cash flows as a measurement basis?

Business

2 answers:

ruslelena [56]2 years ago

8 0

Answer:

Payback Period, Internal Rate of Return, and Net Present Value use cash flows for evaluating capital investment projects.

Explanation:

There are three methods of evaluating a capital investment project that use cash flows as a measurement. These include Payback Period, Net Present Value and Internal Rate of Return. The payback period gives the idea about the time that is required for a person to get back his initial investment. Internal rate of return is used to determine profitability of potential investment. Net present value refers to the difference between the present value of cash outflows and the cash inflows for a specific period of time.

Further explanation:

The Payback period: In this method of payback period, it simply calculates the amount of time that it will take to get one’s original investment back. It helps in analyzing any risks related to investments. An investment with a lesser payback period is seen as a better investment because investor’s original expenses are at risk for a lesser time.

Internal rate of return: Internal rate of return makes use of the discount rates which makes the present value of cash flows in future, equivalent to zero. This strategy helps in comparing the profitability of various investments in different projects.

Net present value: The net present value method makes use of investor's requisite rate of return to compute the present price of future cash flow from the project. Net Present Value is used in creating capital budget and investment planning to estimate the profitability of the project.

Learn More:

Disadvantage of the payback period method : brainly.com/question/13168811 - (Stokholm)

Project acceptance when NPV is used brainly.com/question/13228231 - (Matiasemella)

Keywords:

Capital investment project, cash flow, payback period, internal rate of return, net present value.

bixtya [17]2 years ago

6 0

The method of evaluating a capital investment project that use cash flows as a measurement basis are: Payback period, internal rate of return, and net present value.
- PAyback period, used to determine how much asset is back after the initial saving
- internal rate of return, Used to measure potential profit from an investment
- Net present value, used to determine the worth of all company's assets

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makkiz [27]

Answer: A) cost-leadership business strategy

Explanation:

Cost leadership business strategy is a

strategy of getting a competitive advantage by having the lowest cost of operation in the entire industry.
makes a reasonable profit on each sale because you've reduced costs.

Here, To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors .

where as product differentiation is a technique use to differentiate a product from similar offerings on the market.

So, Sematech is pursuing a cost-leadership business strategy.

So, correct option is (A).

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2 years ago

Casa Del Sol Property Development Company is refurbishing a 200-unit condominium complex at a cost of $1,875,000. It expects tha

Elis [28]

Answer:

In order to find IRR we have to set the present value of all cash flows to 0,

IRR is the rate at which if we discount the payments the NPV (net present value) will be 0

-1875000+

415,350/(1+IRR)

415,350/(1+IRR)^2

415,350/(1+IRR)^3

415,350/(1+IRR)^4

415,350/(1+IRR)^5

415,350/(1+IRR)^6

415,350/(1+IRR)^7

Now we can use trial and error to see at what rate will the npv be

IRR= 12.35%

Another simple way of doing is using the cash flow function of a financial calculator and input these values.

CF0=1875000

C01=415,350

C02=415,350

C03=415,350

C04=415,350

C05=415,350

C06=415,350

C07=415,350

Explanation:

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2 years ago

Once you have collected data for a message, you’ll need to find a way to organize it. Well-organized messages group similar idea

shutvik [7]

Answer:

c. Sparkling water, evening wine tasting, four-star hotel restaurant

Explanation:

The scratch list in general includes a series of services that are provided by a Hotel (the Boston Hotel). Because of the items included in the list, it seems that the Hotel is quite fancy.

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Anvisha [2.4K]

Answer:

7 days

Explanation:

Although the lead time for assembling a finished cartridge is only 2 days, the assembly process cannot begin until all child items are available. Thus, the time that would take Bartran to create at least one finished ink cartridge if it started with nothing in stock is the highest lead time of all child items added to the lead time of assembly.

Labels have the highest lead time of 5 days, therefore the total time taken is:

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2 years ago

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AlladinOne [14]

Answer:

income will decrease by $240,000 or 30%

Explanation:

current income:

revenue = $2,000,000

variable costs $800,00

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income after change:

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fixed costs $400,000

operating income $560,000

income will decrease by $240,000 or 30%

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2 years ago