Question

When a company compares a proposed project to a performance benchmark, which of the following benchmarks...

When a company compares a proposed project to a performance benchmark, which of the following benchmarks might the company use?

Group of answer choices

Minimum required return on investment

Neither of these answers is correct

Minimum number of years in which the project must return the original investment

Both of these answers are correct

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When a co compares project then it should both : -

  • Minimum Required Rate of Return i..e Interenal Rate of Return
  • Minimum no of years in the which the project must return the Original Investment.

Both the performance are important because Minimun Required Rate of Return help you decide how much a project should earn minimum to be feasible. Also it is important to know, how much years will be taken by the project to recover the intial Investment.

Option D is correct.

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company like GE cannot use one WACC benchmark for every single project. Otherwise, it may...
A company like GE cannot use one WACC benchmark for every single project. Otherwise, it may incorrectly accept/reject some projects. Find an example of another such company which should use multiple required rates of return for the capital budgeting decisions.
Which of the following criteria is NOT taken into consideration when analyzing a possible replacement project?...
Which of the following criteria is NOT taken into consideration when analyzing a possible replacement project? The cashflows the current project has generated in the past. The discounted cash flows from the old and potential replacement investment. The depreciation associated with the old and potential replacement investment. The sunk cost associated with the original project. A company is considering a project that has a discount rate of 5%. In the first year, it will have -$100,000 in cash flows. In...
12. Avago Technologies Ltd has a project with initial investment requiring $-180,000 and the following cash...
12. Avago Technologies Ltd has a project with initial investment requiring $-180,000 and the following cash flows will be generated because of the project: $45,000; $59,000; $46,000; and $60,000 respectively at the end of each year for the next four years. If the required rate of return is 0.08, find the Profitability Index (PI) of the project. Group of answer choices 1.86 years none of the answers is correct 0.70 years 1.89 years 0.96 years
A company has the option to invest in project A, project B, or neither (the projects...
A company has the option to invest in project A, project B, or neither (the projects are mutually exclusive and the company has no other investment options). Project A requires an initial investment of $100,000 today and provides cash flows of $35,000 a year for five years. The project will also return back $20,000 in capital in year six. Project B requires a $135,000 investment today and will have cash flows of $40,000 a year for 5 years. The firm’s...
Two new software projects are proposed to a young, start-up company. Project #1 will cost $250,000...
Two new software projects are proposed to a young, start-up company. Project #1 will cost $250,000 to develop and is expected to have an annual net cash flow of $60,000 over the first 5 years of the project. Project #2 will cost $200,000 to develop and is expected to have an annual cash flow of $50,000 over the first 5 years of the project. The company is very concerned about their cash flow. Using the payback period method, which project...
Which of the following statement is incorrect? Select one: a. When the internal rate of return...
Which of the following statement is incorrect? Select one: a. When the internal rate of return is less than this required rate of return, the project is rejected. b. When NPV equals zero, the required rate of return, or discount rate used in the NPV calculation, is greater than the projected rate of return, IRR. c. Most of the answers are correct. d. The number of time periods it takes to cover the initial investment is called the payback period....
Chee Corporation has gathered the following data on a proposed investment project: (Ignore income taxes in...
Chee Corporation has gathered the following data on a proposed investment project: (Ignore income taxes in this problem.)   Investment required in equipment $620,000        Annual cash inflows $86,000        Salvage value $0        Life of the investment 10 years        Required rate of return 6% The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is closest to:
Hawkeye Corp has two investment opportunities with the following cash flows and IRRs. Hawkeye’s required return...
Hawkeye Corp has two investment opportunities with the following cash flows and IRRs. Hawkeye’s required return on each project is 9%. The projects are not mutually exclusive, so Hawkeye could invest in both projects if it wants to. Which projects should Hawkeye invest in using NPV? Year 0 Year 1 Year2 Project A -$6,000 $1,500 $6,500 Project B $2,000 -$1,000 -$1,500 Group of answer choices Both projects A and B Only project B Only project A Neither project Mass Company...
Part A: Capital Budgeting Decisions Chee Company has gathered the following data on a proposed investment...
Part A: Capital Budgeting Decisions Chee Company has gathered the following data on a proposed investment project: Investment required in equipment............. $240,000 Annual cash inflows.................................. $50,000 Salvage value ............................................ $0 Life of the investment ............................... 8 years Required rate of return .............................. 10% Assets will be depreciated using straight line depreciation method Required: Using the net present value and the internal rate of return methods, is this a good investment?
Suppose Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will...
Suppose Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $375,000 Year 2 $475,000 Year 3 $400,000 Year 4 $500,000 Cute Camel Woodcraft Company’s weighted average cost of capital is 10%, and project Alpha has the same risk as the firm’s average project. Based on the cash flows, what is project Alpha’s...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT