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accept or reject rule of npvunder this method a company should accept an investment venture if npv is positive that is if present value of cash
example of npv methodresolution limited intends to purchase a machine worth shs1 500000 that will have a residue value shs200000 after 5 years
net present value method - examplejeremy limited wishes to expand its output by purchasing a new machine worth 170000 and installation costs are
example of net present value methodcost of investment 100000interest rate 10percentinflows year 1 80000year 2 50000npv 80000 11 50000
net present value method - dcf techniquethe method discounts outflows and inflows and ascertains the total present value via deducting discounted
present value of an annuity - dcf techniquean individual investor may not necessarily acquire a lump sum after several years however rather obtain a
present value of a lump sum - dcf techniquegenerally an investor would want to know how much he or she would stop currently to get a provided amount
present value concept - discounted cash flow techniquesthis perception acknowledges the fact which a shilling losses value along with time and as
acceptance rule of accounting rate of return or arrarr procedure will accept those projects whose arr is higher rather than that set with management
disadvantages of payback period1 does not receive into account time value of money and supposes that a shilling obtained in the 1st year and in the
benefits of payback period1 use simply and understand and it has created it popular among in ascertaining the viability of venture executives mainly
acceptance rule of payback period or pbpby using pbp method a company such will accept all those ventures whose payback period is less than to set
control of pattern formation limbs such as all other organs have a pattern what factor or factors environmental affects etc are responsible for
cost of retaining financethis will contains dividends for share capital and interest for debt finance or can say tax deducted or like effective cost
example of accounting rate of return example of accounting rate of return
accounting rate of return method or arrthis method utilizes accounting profits from financial status to assess the viability of investment proposal
compute the payback period - examplecedes restriction has the following details of two 2 of the future production plans just one of these machines
example of payback period methodsuppose a project costs sh80000 and will produce the following cash inflows
computation of payback period method1 under uniform annual incremental cash inflows - if the venture or an asset generates uniform cash inflows then
payback period method - traditional methodsthis method gauges the viability of a venture via taking the outflows and inflows over time to ascertain
methods of analyzing investmentcapital budgeting methodsthere are two process of analyzing the viability of such investment asa traditional process
political factors and technological factors - investment decisionsi political factors - under conditions of political uncertainty that decisions
significance of investment decisionsa such type of decisions is importance since they will influence the companys size or like fixed assets retained
financial planning a financial manager along with present investment policies will be concerned along with how efficiently the companys funds are
investment analysisany type of company will invest finance for the sake of deriving a return that is useful for four main purposes as1 to reward the