Question

Which of the following investment rules does NOT use the time value of money concept?

Select one:

a. Internal rate of return

b.The payback period

c.Profitability index

d. Net present value

Answer #1

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which of the following capital budgeting rules does not use the
time value of money concept?
a) NPV
b) IRR
c) the discounted payback period
d) the profitability index
E) the payback period
Please explain why
Thank you

The two capital investment evaluation methods that consider the
time value of money concept are: a.the net present value method and
the average rate of return method. b.the cash payback method and
the net present value method. c.the average rate of return method
and the cash payback method. d.the internal rate of return method
and the net present value method.

When it comes to the Time Value of Money (TVM), which of the
following is considered to be the "Gold Standard?"
Internal Rate of Return (IRR).
Net Present Value (NPV).
Quick Ratio.
Discounted Payback Period

Which of the following ignores the Time Value of Money
(TVM)?
Net Present Value (NPV).
Undiscounted Payback Period.
Discounted Payback Period.
Profitability Index (Benefit-Cost Ratio).

4.Which of the following capital investment decision methods
typically adjust for risk?
Select one:
a. Net present value
b. Internal rate of return
c. Payback
d. Accounting rate of return

There are various investment decision rules, which financial
managers may select. Choose one of the alternatives to the NPV, and
compare and contrast one of the selected alternatives with NPV
(payback period, discounted payback period, IRR or profitability
index.

Create a time value of money Excel spreadsheet for the following
two investments: A. Initial investment ($100,000); Forecasts: Year
1 payback ($25,000); Year 2 payback ($25,000); Year 3 payback
($25,000) B. Initial investment ($100,000); Forecasts: Year 1
payback ($20,000); Year 2 payback ($25,000); Year 3 payback
($40,000) Use a re-investment rate of 10%. Calculate Net Present
Value (=NPV) for each investment and specify which investment is
the most profitable. (You are not required to use the Excel (=NPV)
formula but...

11.
The discount rate that makes the net present value of an
investment exactly equal to zero is the:
A)
Payback period.
B)
Internal rate of return.
C)
Average accounting return.
D)
Profitability index.
E)
Discounted payback period.
12.
The internal rate of return (IRR) rule can be best stated
as:
A)
An investment is acceptable if its IRR is exactly equal to its
net present value (NPV).
B)
An investment is acceptable if its IRR is exactly equal to...

There are various investment decision rules, which financial
managers may select. Choose one of the alternatives to the NPV, and
compare and contrast one of the selected alternatives with NPV
(payback period, discounted payback period, IRR or profitability
index. Provide a real world example.

Which of the following statements is correct:
A. projects with unconventional cash flows have multiple
internal rates of return
B. if 2 projects are mutually exclusive, you should select the
project with the shortest payback period
C. If the IRR exceeds the required return, the profitability
index will be less than 1.0
D. the Profitability index will be greater than 1.0 when the net
present value is negative
E. when the internal rate of return is greater than the required...

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