Which statement characterizes the time value of money concept

for a capital investment project to be acceptable, it must generate a rate of return

Solution for For a capital investment project to be acceptable, it must generate a rate of return A) Less than the required rate of return B) Equal to or…of an investment project. When using the internal rate of return, the cost of capital acts as a hurdle rate that a project must clear for acceptance.NPV and IRR are two discounted cash flow methods used for evaluating investments or capital projects. NPV is the dollar amount difference between the present. The initial investment is the original amount invested in the project however, any salvage (residual) value for the capital asset needs to be subtracted from. A project or investment’s NPV equals the present value of net cash inflows the project is expected to generate, minus the initial capital required for the.

abc company has an 8 desired rate of return

What is the required rate of return on ABC stock?. If the company has a dividend yield of 5.4%, what is the required return on the company’s stock?Accounting Rate of Return (ARR) is the average net income an asset is expected to generate divided by its average capital cost, ABC company’s stock is currently selling at Rs 45 per share. The company has paid. stock for a year for a 13 per cent required rate of return? Solution:.The company will have a minimum expected return that this project will need to meet or exceed before further consideration is given. ARR, like payback method, Before an individual embarks upon an investment or a company on a specific project, they seek to determine the benefit, or profit, that they will achieve.

the length of time required to recover the initial investment in a capital asset is known as the:

Period of time required to recoup the cost of investment. a firm may decide to invest in an asset with an initial cost of $1 million.The payback period measures the time required to recoup the initial investment in the capital asset. Consider the following two examples.. how long it will take to “pay back” or recover the initial investment. require a payback period equal to or less than some specified time period.Enter the initial investment and annual cash inflows in ClearTax payback. The payback period shows you the time taken to recover the cost of the project.Payback period can be defined as period of time required to recover its initial cost. Payback period Formula = Total initial capital investment /Expected.

the cost of capital is called all of the following except:

Which of the following is an example of a capital investment project?. b. the present value of all revenues minus the present value of all costs that. QUESTION 30 All of the following types of executive loans are exempt from below-market rate loan tax treatment EXCEPT: A. Loans with no significant tax. Example of How to Use WACC. As an example, consider a hypothetical manufacturer called XYZ Brands. Suppose the book value and market value of the company’s debt. Under this method, all sources of financing are included in the calculation, and each source is given a weight relative to its proportion in the. For such companies, the overall cost of capital is derived from the weighted average cost of all capital sources. This is known as the weighted average cost of.