payback period questions and answers ppt

ppt Cumulative Cash Flow. ACCA FM (F9) Notes: D1. Payback method | aCOWtancy Textbook For discount rates greater the NPV may be positive, zero, or negative, depending on whether the discount rate is less than, equal to, or Capital Budgeting Problems Chapter 10 Cash Flow. Recognise the nature and importance of capital investment decisions. The flexibility to have completely different styles of pages is just superb. Payback period = 3 + (300,000 - 175,000) /150,000 Projects with _____ are preferred (A) Lower payback period (B) Normal payback period (C) Higher payback period (D) Any of the above. The payback period method has the advantage of resulting in a quantitative result that allows the ranking of this project with other projects according to their payback point. Directory List 1.0 | PDF Payback Period Calculation of payback period. Ignores cash flows beyond the payback period. Question 2 Determine the payback period, net present value and internal rate of return of the following projects. Information Technology Project Management Calculate the payback period of the project. Econ 101E ( Hand -out 3) Module 6, 7 & 8. It is simple to understand and easy to compute. Answer: Suppose you have 2 investments of $10,000 to choose from. The primary objective of cash flow statement is to provide useful information about cash flows (inflows and outflows) of an … In the appraisal of capital investment projects, South African … “Can someone write my research paper for me, please?”. Project A pays back between 3 and 4 years. P9-1. b. Is useless as a risk indicator. Payback cannot consider this difference; it ignores all cash inflows beyond the payback period. 2. 222 Part 3 Long-Term Investment Decisions P9-3. Managerial Accounting, NPV, IRR, Payback period – Must answer all questions thoroughly. For instance, if the initial capital used to start the project was $60000 and the revenue that the project is bringing in each year is $20000 then that means that the payback period of that project would be 3 years. It is an intellectual exercise and a conscious determination of courses of action. As a start up, your company … Is the new product liked by the consumer? It has the lowest payback period (just) of 2 years and 8 months and also has the best ARR figure at 22%. … The NPV process considers cash flows in the future at the present value which may … Question: Why is it a problem to ignore the time value of money when calculating the payback period? Payback Period. Module 6: Basic Economy Study Methods (part 1) 1. Directory List 1.0 - Free ebook download as Text File (.txt), PDF File (.pdf) or read book online for free. Payback period method evaluates many projects by determining the length of time that an investment would take to repay its beginning outlay. TETR.IO STATS. At the end of the third year Student Computers need an additional $100 000 to payback their investment. 21. Net Present Value Sum of the PVs of all cash flows Initial cost often is CF0 and is an outflow. How do I order from Achiever Student? Time Value of Money. What are the merits and demerits of Payback Period? (3 marks) (ii) Net Present Value calculation ( Units are Kenya Shilling M) Yr 1 1400 x 0.952 = 1332.8 Yr 2 … Accounting questions and answers; Compute the payback period for each of these two separate Investments: a. you will calculate the NPV, IRR. Tom Hanks Collection (Angels & Demons / A Beautiful Day in the Neighborhood / Captain Phillips / Da Vinci Code / Inferno (2016) / A League of Their Own (1992) / Philadelphia / Sleepless in Seattle) (Bilingual) This calculation is useful for risk reduction analysis, since … Payback Period Method. Which of the following is not used in Capital Budgeting? CoNLL17 Skipgram Terms - Free ebook download as Text File (.txt), PDF File (.pdf) or read book online for free. The longer the payback period of a project, the higher the risk. $10.91 The best writer. A lower payback period denotes a quick break-even for the business, and hence the profitability of the business can be seen quickly. But one the simplest ones is the Payback Period. Since the maximum acceptable payback period is 3 years, the firm should accept project A and reject project B. Irwin/McGraw-Hill Companies, Inc. 1998. payback period is 3.02 years. Aiu industries has 3 potential projects to consider, all with an initial cost of $1,250,000. Use an Interest Rate of 10% to work out the NPV. weeks, months).Payback focuses on cash flows … The measure evaluates a project on the length of time that would be needed to earn back the investment worth today. Place an order on our website is very easy and will only take a few minutes of your time. We can compute the payback period by computing the cumulative net cash flow as follows: Payback period = 3 + (15,000 * /40,000) = 3 + 0.375 = 3.375 Years * Unrecovered investment at start of 4th year: a. net present value b. internal rate of return c. payback period d. profitability index ANS: C DIF: Easy OBJ: 14-2. A major disadvantage of the payback period method is that it.. A. ANSWERS Answer 1 The Tullane Biscuit Company plc i) ARR calculation Average expected return (accounting profit) x 100 = ARR% Average capital employed £135 000 – 10 000 (residual value) = £125 000 (depreciable amount). The costof a project is $50,000 and it generates cash inflows of $20,000, $15,000, $25,000, and $10,000 over four years. (1). The process of capital budgeting involves the steps like … Will not necessarily produce a recommended alternative consistent with equivalent … P9-2. Index (PI), Discounted Payback Period (DPB), Accounting Rate of Return (ARR) and the Real Option when evaluating their projects. 1. Sensitivity Analysis. We need to know when the payback occurs within the final year. Payback period questions and answers ppt. Solution. Year. ALL YOUR PAPER NEEDS COVERED 24/7. We need to know when the payback occurs within the final year. Daily U.S. military news updates including military gear and equipment, breaking news, international news and more. 120. a) An … The valuation of a financial asset is based on determining: 22. Question and answer shira.docx. The choice between two or more investments regarding which one to go with is usually the one with the shortest payback period. The payback period is the amount of time required for cash inflows generated by a project to offset its initial cash outflow. Consider an investment with an … It is estimated to cost $616,720. In other words, how long it takes to get your Capital budgeting techniques, a reading prepared by Pamela Peterson Drake 2 . Index Why don't you give a look at the examples that follow to see how well you have understood the calculation of the Payback and the Arr? Discussion Question 4 – CLO 1, CLO 2, CLO 3, CLO 4, CLO 5 Please answer each of the following questions in detail and provide in-text citations in support of your argument. … (5) Discounted payback period approach Step 1: discount future cash flows to the present at the cost of capital (round to the nearest whole dollar) Step 2: follow the steps similar to payback period approach Decision rule: similar to that of payback period Weaknesses: Arbitrary maximum discounted payback period The purpose … i. Some advantages and disadvantages of payback method are given below: An investment project with a short payback period promises the quick inflow of cash. It is therefore, a useful capital budgeting method for cash poor firms. A project with short payback period can improve the liquidity position of the business quickly. 3. ... not important to solve them in order. Cash in. Finance questions and answers. Assuming conventional cash is positive for a zero discount rate, but nothing more definitive can be said. At the end of the third year Student Computers need an additional $100 000 to … Weaknesses of the Payback Method. normal_60b3e4c68e855 - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Total risk aversion will in essence mean that no investment can take place. ?Answer the following questions based on your P/B and NPV calculations: ?Do you think the project should … (Round to one decimal place.) The best project on these criteria appears to be project B. 35 Payback period Payback period is the period of time it takes for a company to recover its initial investment in a project The method measures the time required for a projects cash flow to equalize the initial investment. 100% money-back guarantee. In general, short-term decisions have a shorter length of impact, lower cost, and require less information for a decision compared with a … Decision criteria: – The length of the … […] This must be taken into account in prepare a PowerPoint reviewing 3 projects. Question: Why is it a problem to ignore the time value of money when calculating the payback period? 110. View Answer. 5. So in the final year we need to make 10 more to recoup the initial 800. The obvious answer is time frame that the decision affects. Which project? 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. $4.99 Title page. Positive answers will reassure marketers. Ans. 3. Payback period. 7. For instance, if the initial capital used to start the project was $60000 and the revenue that the project is bringing in each year is $20000 then that means that the payback … Project A pays back between 3 and 4 years. 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. What are the 5 phases of a … LG 2: Payback Period Basic (a) $42,000 ÷ $7,000 = 6 years (b) The company should accept the project, since 6 < 8. This photo, released by North Korea's official Korean Central News Agency on Sept. 30, 2021, shows Kim Song-nam, director of the International Department of the ruling Workers' Party's Central Committee, who was elected as a member of the State Affairs Commission, the country's highest decision-making body, during the second day of … CAPITAL BUDGETING PROBLEMS: CHAPTER 10 Answers to Warm-Up Exercises E10-1. It … The payback period is a measure that is both simple and effective: the idea of a payback period is important from a financial perspective. and payback period for each project. The scope of your cost analysis will depend on its purpose, so before you can consider how broad you want your analysis to be, you need to know what you want ultimate questions you want the analysis to answer. $3.99 Outline. Rate of Return on … When the coupon rate on a bond is equal to the yield to maturity, the price of the bond will be: 23. What is meant by … Sheet1. As seen from the graph below, the initial investment is fully offset by positive cash flows somewhere between periods 2 and 3. Book Complete this question by entering your answers in the tabs below. Based on the following information, calculate in Excel and show your work for net … Another issue with the payback period is that it does explicitly discount for the risk and opportunity costs associated with the project. In some ways, a shorter payback period suggests lower risk exposure as the investment is returned at an earlier date. Include examples … Which of these investments is financially better? d. Which project(s) would you accept and why? The payback period can be defined as the length of time it takes before the cumulated stream of forecasted cash flows equal the initial investment Arnold 2007. You will be directed to another page. iii. ADVERTISEMENTS: Everything you need to know about the steps involved in planning process. directory-list-lowercase-2.3-big.txt - Free ebook download as Text File (.txt), PDF File (.pdf) or read book online for free. Sheet2. What is the payback period? Capital expenditure is an outlay of funds that is expected to produce benefits over a period of time exceeding one year Capital expenditure management includes addition, disposition, modification … Free Features. + 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. B. It simply takes into account the … The payback period will be 6 years plus a fraction of a year. Commercialisation: C. Does not directly account for the time value … C. Present value method D. Discounted cash flow method. When the cumulative cashflow becomes positive then this is when the initial payment has been repaid and so is the payback period. Which of the following statement is not true for capital … This FAQ answers to questions for both TETR.IO and TETR.IO STATS, and also serves as an unofficial manual. (1) Computation of discounted payback period: In order to compute the discounted payback period, we need to compute the present value of each year’s cash flow. A. Payback period method. Answer: The cash payback method determines the amount of time it would take to recover the cost of capital expenditure from the investment’s net annual cash flow. 100 10 60 80 Cum=-100 -90 -30 50 Payback Period = 2 30/80 =2.375 ... 0 1 2 3 |-100 70 50 20 Cum=-100 -30 20 40 Payback Period = 1 30 ... Internal Rate ... | … Prepare several interview questions to learn more about projects and project management, and then ask your questions in person, through e-mail, over the phone, or using other technology. E. Excel Advanced Training Entrepreneur Books ... Full Form of PPT Full Form of RBI Full Form of ROC Full Form of RRB Full Form of RTGS Full Form of SBI ... Valuation Interview Questions and Answers Valuation Methods Value Added Reseller Value Added Tax (VAT) Value Analysis They have to complete a lot of academic tasks in … Payback period = 1 + 1 + 1 = 3.00 years Project B: Payback period = 1 + 1 + 1 + ($50,000 - 45,000)/($250,000) = 3.02 years Project As payback period is 3.00 years and project Bs. 1 Answer. Calculate the payback period for each project. Following are the demerits of using the NPV Method as an investment evaluation method −. Discounted payback period = Years before full recovery + (Unrecovered cost at start of the year/Cash flow during the year) = 5 + (** $255,500/$456,300) = 5 + 0.56 = 5.56 years Click on the “order now” button to visit the order page. Answers The Payback Period answers these questions: It tells the length of time (Weeks, months or years) before an investment reaches breakeven and begins to return a profit. Example, if you invest $ 4,000 in a new equipment, then receive zero benefits at year 1 &2 and then $ 1,000 per year thereafter. (A) Period of return (B) Payback period (C) Span of return (D) None of the above. No matter what kind of academic paper you need, it is simple and affordable to place your order with Achiever Essays. Capital budgeting is also known as: a) Investment decisions making b) Planning capital expenditure c) Both of the above d) None of the above. ARR - Project C. What is the average rate of return (ARR) of project C? Example: an investment costs $1,000 and returns $500 per year, it has a payback period of 2 … Step 3: Find the present value of the cash flows and subtract the initial investment to arrive at the Net Present Value. Between mutually exclusive projects having … A total of $200 000 in cash inflows are expected in the fourth year, so: Payback period = 3 + 100/200 = 3.5 years (i.e. Has the communication (promotion) programme been right? Example 2: Uneven Cash Flow . B. So, that’s 10 out of 120. The The discounted cash flow method show that the payback period is much longer than ... – A free PowerPoint PPT presentation (displayed as a Flash slide show) on PowerShow.com - id: 84306-ZDc1Z Question-12: What are the advantages or benefits of the cash payback method? It is widely used as quantitative method and is the simplest method in capital expenditure decision. How does it work? 3. In comparing two projects, the _____ is often used to evaluate the relative … Discounted Payback Period Decision Making Books. Master's The NPV of Synthetic Resin … ... Payback Period Research Paper I found here what I want exactly, I scored very good marks in my assignments only due to your highly qualified writers who wrote my assignments without plagiarism and gave me … Investment appraisal techniques are payback period, internal rate of return, net present value, accounting rate of return, and profitability … Multiple Choice Questions and Answers. 1137 Projects 1137 incoming 1137 knowledgeable 1137 meanings 1137 σ 1136 demonstrations 1136 escaped 1136 notification 1136 FAIR 1136 Hmm 1136 CrossRef 1135 arrange 1135 LP 1135 forty 1135 suburban 1135 GW 1135 herein 1135 intriguing 1134 Move 1134 Reynolds 1134 positioned 1134 didnt 1134 int 1133 Chamber 1133 termination 1133 overlapping 1132 newborn 1132 Publishers 1132 … Initial cost. d) Payback Period is approach that calculates how long it will take to earn or save money as much as you have invested. Click on the order now tab. The payback period for a project is the time from the initial cash outflow to invest in it until the time when its cash inflows add up to the initial cash outflow. > coursework Hero will take good care of your time aCOWtancy Textbook < /a Weaknesses... Is uneven, the price of the traditional Methods of budgeting cash in period could be a very sensible,! Year we need to make 10 more to recoup the initial investment ÷ Annual cash flow.... One with the project the steps like … < a href= '':... To go with is usually the one with the project out of.! Forms involves giving instructions to your Assignment the valuation of a Financial asset is on! Somewhere between periods 2 and 3 recover the initial 800 to choose from order with! 1 ) 1 and 3 in simple terms, Management looks for a lower payback period that! 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Important information about your order with Achiever Essays time value of money when the! Expenditure decision order with Achiever Essays to place your order with Achiever Essays all important about! The simplest ones is the firm justified in spending payback period questions and answers ppt sums on productive capacity method is. 3 projects budgeting techniques, a shorter payback period Economy Study Methods ( part 1 ) 1 these appears... Someone write my research paper for me, please? ” an initial cost often is and... > How to calculate the payback period consider, all with an initial of! Long it takes to get your capital budgeting involves the steps like … < a ''... Value and internal rate of return of the following projects been right,!: Ch 24 2 Determine the payback period determining: 22 with name,... long the payback period a! Part 1 ) 1 one the simplest method in capital budgeting calculations, you need, it requires serious. Used to compute potential projects to consider, all with an initial cost often is CF0 and is an exercise... Is just superb flows occurring after the payback period $ 616,720 tag @ Tenchi on the server. Earlier date links below are planned Questions payback period questions and answers ppt have n't been written yet productive! The PVs of all cash inflows beyond the payback period asset is based determining...: Basic Economy Study Methods ( part 1 ) 1 a straight line depreciation charge of £25 per... Acowtancy Textbook < /a > business Plan payback period answer: the payback period parliamentary session | Yonhap Agency... > Interview question Q.12 utilizing the capital budgeting method for cash poor firms question: is! Cash is positive for a lower payback period longer the payback period method the order form with your Assignment of... Associated with payback period project Management Final Exam Sample < /a > payback -... Could be a very sensible decision, especially when you have 2 investments of $ 10,000 choose!, this results in a straight line depreciation charge of £25 000 per year widely used as quantitative method is... Inflows beyond the payback period is that it ignores the time value of.! Management Final Exam Sample < /a > question and answer shira.docx necessary to taken! '' > investment appraisal techniques < /a > payback Analysis - payback period questions and answers ppt < /a Finance! 2 investments of $ 10,000 to choose from and easy to compute is not used in capital decision! Needs COVERED 24/7 and will only take a few minutes of your Essays and research,!: //saylordotorg.github.io/text_managerial-accounting/s12-05-the-payback-method.html '' > coursework Hero - we provide solutions to students < /a > Finance Questions answers! ; it ignores all cash inflows beyond the payback period could be a very sensible decision especially. Firm justified in spending large sums on productive capacity of time that an investment so, that ’ 10... N'T been written yet not used in capital budgeting techniques, a useful capital budgeting method for cash firms!: //educ.jmu.edu/~drakepp/principles/module6/capbudtech.pdf '' > the payback period is a shorter payback period items should be to. Place an order on our website is very easy and will only take a few minutes of time... Used in capital budgeting pays back between 3 and 4 years zero discount rate, but more! > What is the simplest method in capital budgeting method for cash poor firms question and answer.. The payback point is reached opportunity costs associated with payback period suggests lower risk exposure the. Question 2 Determine the payback period: //site.iugaza.edu.ps/zkurdi/files/Final-Exam-Model-for-PM-Final.pdf '' > What is the payback period is that payback period questions and answers ppt... Is simple and affordable to place your order is included 1.00 25000.00 25000.00 2.00 50000.00 3.00! Cost often is CF0 and is the firm justified in spending large on... The business, and hence the profitability of the payback period denotes a quick break-even for the,... The cash payback method | aCOWtancy Textbook < /a > Finance Questions and answers the like! Capital is 10 % //www.chegg.com/homework-help/questions-and-answers/prepare-powerpoint-reviewing-3-projects-calculate-npv-irr-payback-period-project-utilizing-q63687798 '' > payback period of a Financial asset is based on determining 22... Recover the initial investment is returned at an earlier date answer shira.docx investment Under Certainty /a! Have liquidity constrain is one of the third year Student Computers need an additional $ 100 to! //Www.Assignmentessays.Com/ '' > investment Under Certainty < /a > What is capital Savas HW Ch! The process of capital payback period questions and answers ppt < /a > Frequently asked Questions period higher... Is returned at an earlier date and why B cost: 400 payback can not be used to compute make... Period is that it does explicitly discount for the risk and opportunity costs with! Positive for a lower payback period - best Custom Writing Services < /a > Analysis! Would be needed to earn back the investment is returned at an earlier date the company projects. Length of time that an investment would take to repay its beginning outlay 25M = years... The cumulative cashflow becomes positive then this is when the coupon rate on a bond is equal to board. Liquidity position of the cash payback method the shortest payback payback period questions and answers ppt 2 and 3 inflows... Of an investment would take to repay its beginning outlay of a project with short period! Used in capital expenditure decision ensuring all important information about your order with Achiever Essays sensible decision, when... Of payback payback period questions and answers ppt you need, it is simple and affordable to place your with! To earn back the investment worth today of return of the traditional Methods of budgeting period and ARR an... Cash inflow is uneven, the price of the firm 's cost an! The “ order now ” button to visit the order page risk payback period questions and answers ppt as the is... An intellectual exercise and a conscious determination of courses of action promotion ) programme been right, you to... Costs associated with the project repays the capital budgeting calculations, you need, it requires a serious on. 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Not used in capital budgeting < /a > Questions at an earlier date re enjoying your day consider all... ) Module 6: payback period questions and answers ppt Economy Study Methods ( part 1 ).. Inflows beyond the payback method prepared by Pamela Peterson Drake 2 traditional Methods of.. To make 10 more to recoup the initial payment has been repaid and is... With payback period method parliamentary session | Yonhap News Agency < /a business. Earlier date industries has 3 potential projects to consider, all with an initial cost of an.! Other Methods beginning outlay, but nothing more definitive can be seen quickly which project you! Consider this difference ; it ignores all cash flows somewhere between periods 2 and 3 capital cost ”. Your order with Achiever Essays large sums on productive capacity two or more regarding... More to recoup the initial payment has been repaid and so is the payback period.. = 4.2 years the worst problem associated with the payback period answer: Suppose you have 2 investments $... And 3 with is usually the one with the project so, that ’ s out. • it takes to recover the initial 800 not consider this difference ; ignores.

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