Chapter 9 Capital Budgeting Techniques Solutions to Problems Note to instructor: In most problems involving the internal rate of return calculation, a financial calculator has been used. Question Bank is a free tool which allows you to create practice question papers from thousands of WJEC past paper questions. P9-1. SK Manufacturing Company uses discounted payback period to evaluate investments in capital assets. Determine the cash payback period. We provide complete project management pdf. How To Calculate The Payback Period? payback period questions and answers ppt PDF payback period questions and answers You should use a discount rate of 10%.. 7 and 8 bedrooms, or combined to 15 bedrooms . Payback & ARR - self-test questions 11. (c) The views of the directors on investment appraisal can be discussed from . + CF s ≥−CF 0 = I0 In words, s is the minimum length of time such that the sum of cash flows from a project is positive. payback period questions and answers pdf The sales director has now come to the board with a proposal to expand the range further into chocolate coated biscuits . But here you are, reading about the will (even if it gives you an eerie feeling in the pit of your stomach). Year Cash Flow 0 $6,400 1 $1,600 2 $1,900 3 $2,300 4 $1,400. Payback is perhaps the simplest method of investment appraisal.The payback period is the time it takes for a project to repay its initial investment.Payback is used measured in terms of years and months, though any period could be used depending on the life of the project (e.g. Multiple Choice Questions and Answers. Answers 1) c. Payback occurs in year 9, but the payback period for the project starts in year 3 (right after the end of year 2), so simple payback = 9 - 2 = 7 years. - All the questions are 100% valid and stable. LG 2: Payback Period Basic (a) $42,000 ÷ $7,000 = 6 years (b) The company should accept the project, since 6 < 8. The author used empirical studies and personal judgment to analyze data from the selected countries on how often the . (5 marks) b) Payback method. The payback period is essentially the break-even point following a sequence of successive cash flows. appraisal techniques - short answer questions ; Quantitative factors - numerical questions (1) Quantitative factors - numerical questions (2) Investment appraisal - quantitative factors - numerical questions 2 Ahandbook is really a user's guide to operating the . Welcome to the 8th resort. TherefoÑ, Payback period 5,000 = 5 years + 8,000 = 5.62 yours, (ii) Net Present Value (at cost of capital) Year 10 cash now Rss 7,000 7,000 7,000 7,000 8,000 10,000 15,000 10,000 4,000 Total PV of inflows Less Initial outlay Net Present Value .751 .683 .621 *513 .386 Scanned with CamScanner Chapter 9 Capital Budgeting Techniques Solutions to Problems Note to instructor: In most problems involving the internal rate of return calculation, a financial calculator has been used. In Playback Period approach to risk the target payback period is (a)Not adjusted, (b)Adjusted upward, (c) Adjusted downward , (d) (b) or c. 13. The questions in this document are in a format similar to what will appear on midterm #3, . Payback period questions and answers We know no one wants to talk about accepting the will. If you desire to humorous books, lots of novels, tale, jokes, and more fictions collections are along with launched . Payback = 2.75 years 2. Colourful slides, animations, video links, fun activities, as well as questions (with answers provided) are all included in this engaging and informative lesson on calculating the payback period, applicable to all syllabi. The company's cost of capital is 12%. Download Ebook Payback Period Questions And Answers Payback Period Questions And Answers Thank you definitely much for downloading payback period questions and answers.Maybe you have knowledge that, people have see numerous time for their favorite books later this payback period questions and answers, but stop taking place in harmful downloads. (5 marks) Because the discounted cash flow values are smaller (i.e., money is worth less overtime) in this case, the discounted payback period is longer than the payback period. but instead of the number of units to cover fixed . Q1c b. Unlike net present value and internal rate of return method, payback method does not take into account the time value of money. Answer: the disadvantages or limitations of Payback period method are as follows: The major disadvantage of this method is that it does not place much emphasis on the earning power of the project. In some cases, you likewise do not discover the message payback period . 5000 = PMT 1 / 6% * (1-1/(1+6%)^10) PMT 1 = $679.34 2. Dec 12 Q4b. The complete assignment consists of 11 pages (including this page). Find the questions you need, add them to your paper and export your paper with accompanying mark scheme and examiner's comments as a PDF ready to use in the classroom. P9-1. It makes us uncomfortable, a little superstitious and maybe even a little nauseous. A significant advantage of the payback period is that it: A. places emphasis on time value of money. weeks, months).Payback focuses on cash flows and looks at the cumulative cash flow of the investment up to the point . • The Economics book does have net cash inflows of £30,000 more than the . Download Free Payback Period Questions And Answers Payback Period Questions And Answers If you ally habit such a referred payback period questions and answers book that will meet the expense of you worth, acquire the unconditionally best seller from us currently from several preferred authors. Is the investment desirable if the required payback period is 4 years . Question 1. ANS: C . It doesn't consider the time value of money. Decision Criterion Using Payback Period • For independent projects: Accept if s is less than or equal to some fixed threshold . Payback Period Questions and Answers | Study.com The payback period for Alternative A is 3.125 years (i.e., 3 years plus 1.5 months). C. does not properly consider the time value of money . ARR - Project C. What is the average rate of return (ARR) of project C? Since it was established five years ago it has gradually increased its range of plain and cheese biscuits. Chapter 15 Students' questions and answers QUESTIONS Question 1 The Tullane Biscuit Company plc The Tullane Biscuit Company plc is a successful biscuit manufacturer. We are currently creating a new and improved . 3) d. 4) c. 5) c. This series is a combination of a present sum and a uniform series, and so it can be solved as . Using the Payback Method. Say a project requires an initial investment of $10,000 and you can expect cash inflows at . Give yourself marks for mentioning any of the points below: a) Net present value is the present value of future income from an investment project, less the cost. Email Us tyres2u247@gmail.com. Answers. B is the best choice. Net Present Value of a machine Comparing Payback Period and Discounted Payback Period - Neilsen Incorporated is switching from Payback Period to Discounted Payback Period for small dollar projects. Multiple Choice Questions (MCQ) on Payback Method quiz answers PDF, solve cost accounting MCQ worksheet to practice mock test. Question-13: What are the disadvantages or limitations of Payback period method? The author used empirical studies and personal judgment to analyze data from the selected countries on how often the . 5 mins read. P9-2. You have already made it so far and we . So we dodge the topic left and right and put off taking the will again. You have 4 hours to answer all questions. Download Project Management Notes, PDF, Books, Syllabus for MCOM 2021. B is best. Ideally, management would not like to forgo any . Required: Evaluate the two alternatives using the following: (a) payback method, (b) rate of return on investment method, and (c) net present value method. 9 Constant annuity N = 10 years PV = $5000 at year 0 (now) r 1(annually) = 6% for first 3 years Then, suddenly change interest policy: r 2(annually) = 8% for last 7 years What is the PMT of today? 1. Solution (a) Payback method. Q2b. This uses various techniques to assist management in selecting one project over another. In Sensitivity Analysis, the emphasis is on assessment of sensitivity of (a) Net Economic Life, (b) Net Present Value, (c) Both (a) and (b), (d)None of (a) and (b) 14. D. provides a measure of li. The payback period is essentially the break-even point following a sequence of successive cash flows. The payback period for an initial cost of $6,500 is a little trickier. #PAYBACK PERIOD QUESTIONS AND ANSWERS #Download file | read online payback period questions and answers Latest GAQM APM-001 Associate in Project Management Exam Questions & Answers - This is the latest practice test to pass the GAQM APM-001 Associate in Project Management Exam. TherefoÑ, Payback period 5,000 = 5 years + 8,000 = 5.62 yours, (ii) Net Present Value (at cost of capital) Year 10 cash now Rss 7,000 7,000 7,000 7,000 8,000 10,000 15,000 10,000 4,000 Total PV of inflows Less Initial outlay Net Present Value .751 .683 .621 *513 .386 Scanned with CamScanner Principally, when computing the payback period, an assumption is made that any cash flow that occurred within a certain period was realized consistently and continuously all through that period, and not at a particular point in time. PAYBACK PERIOD QUESTIONS AND ANSWERS PDF Payback period is the number of years required to recover the cost of project or initial cash out flows. Download File PDF Payback Period Questions And Answers payback period is over 3 years and the project is a no-go! The discounted payback period is found by first calculating the present values of each future cash flow. But here you are, reading about the will (even if it gives you an eerie feeling in the pit of your stomach). 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