Book rate of return is an unsatisfactory guide to selecting capital projects becauseI). It uses accrual accounting numbers.II). It compares a single project against the average of capital projects.Ill). It uses cash flows to gauge the desirability of the project.
Answer(s): B
A common misstep in regard to capital budgeting is the temptation to gauge the desirability of a project by using accrual accounting numbers instead of cash flows. Net income and book value are affected by the company's choices of accounting methods. A project's true rate of return cannot be dependent on bookkeeping decisions. Another distortion inherent in comparing a single project's book rate of return to the current one for the company as a whole is that the latter is an average of all of a firm's capital projects. Embedded in that average number may be a handful of good projects making up for a large number of poor investments.
The maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative is called
Answer(s): A
An opportunity' cost is the maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative. In capital budgeting, the most basic application of this concept is the desire to place the company's limited funds in the most promising capital project(s).
Post-investment audits
Post-investment audits should be conducted to serve as a control mechanism and to deter managers from proposing unprofitable investments. Actual-to-expected cash flow comparisons should be made, and unfavorable variances should be explained. Individuals who supplied unrealistic estimates should have to explain differences.
The accounting rate of return
The accounting rate of return (also called the unadjusted rate of return or book value rate of return) is calculated by dividing the increase in accounting net income by the required investment. Sometimes the denominator is the average investment rather than the initial investment. This method ignores the time value of money and focuses on income as opposed to cash flows.
When using the net present value method for capital budgeting analysis1 the required rate of return is called all of the following except the
The rate used to discount future cash flows is sometimes called the cost of capital, the discount rate, the cutoff rate, or the hurdle rate. A risk1ree rate is the rate available on risk-free investments such as government bonds. The risk-free rate is not equivalent to the cost of capital because the latter must incorporate a risk premium.
Share your comments for Financial CMA exam with other users:
very helpful
thanks.. very helpful
i registered for 1z0-1047-23 but dumps qre available for 1z0-1047-22. help me with this...
please upload oracle 1z0-1110-22 exam pdf
becoming interesting on the logical part of the cdbs and pdbs
some of the answers are incorrect, i would be wary of using this until an admin goes back and reviews all the answers
question # 267: federated operating model is also correct.
its helpful alot.
the questiosn from this braindumps are same as in the real exam. my passing mark was 84%.
it is an exam that measures your understanding of cloud computing resources provided by aws. these resources are aligned under 6 categories: storage, compute, database, infrastructure, pricing and network. with all of the services and typees of services under each category
good and very useful
i cleared the az-104 exam by scoring 930/1000 on the exam. it was all possible due to this platform as it provides premium quality service. thank you!
easy questions
could you please upload ad0-127 dumps
good content
understanding about joins
please upload oracle cloud infrastructure 2023 foundations associate exam braindumps. thank you.
questions made studying easy and enjoyable, passed on the first try!
has anyone recently attended safe 6.0 exam? did you see any questions from here?
question 13 should be dhcp option 43, right?
the buy 1 get 1 is a great deal. so far i have only gone over exam. it looks promissing. i report back once i write my exam.
is this dump good
good ................
passed
yes going good
good questions for practice
need dump and sap notes for c_s4cpr_2308 - sap certified application associate - sap s/4hana cloud, public edition - sourcing and procurement
question 11: d i personally feel some answers are wrong.
nice questions
looking for c1000-158: ibm cloud technical advocate v4 questions
can you share the pdf
admin ii is real technical stuff
could you post the link