• Capital Investment Analysis & Standard Costing Techniques
    popular methods are average rate of return, cash payback, net present value and internal rate of return method. Some of these methods focus on present values and some ignore it.However, some benefits of capital investments are of qualitative nature. These benefits cannot be readily estimated in dollar...
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  • finance
    discounted cash flow techniques (traditional method) These are:- Accounting rate of return (ARR) Payback period (PBP) b)Discounted cash flow techniques (modern Methods) These are: o Net Present value (NPV) o Internal Rate of return (IRR) • Profitability...
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  • Investment Appraisal Techniques
    does not take account of the  variability of those cash flows Net present value and internal rate of return Discounting cash flow allows you to put cash flows received at different times on a comparable basis. You can use discounting cash flow to evaluate potential investments. There are two...
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  • Report
    discounting; explain the concepts of net present value (NPV), internal rate of return (IRR), payback method and accounting rate of return (ARR); calculate NPV, IRR, the payback period and ARR; justify the superiority of NPV over the IRR; explain the limitations of payback and ARR; justify why the payback...
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  • Corporate Finance Q&a
    capital projects. The higher a project's internal rate of return, the more desirable it is to undertake the project. Present Value Index (PVI) / Benefit-cost ratio /Profitability index: is the present value of a project’s future cash flows divided by the initial investment. The project will be...
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  • Finance
    Net Present Value and Other Investment Criteria Question1 List the methods that a firm can use to evaluate a potential investment. 1) Accounting rate of return: ARR is a non-discounted cash flow method in which accounting information are used. 2) Payback Period...
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  • Management Accounting
    an investment proposal is positive, the required rate of return is greater than the return that will be generated by the investment.  False. A positive net present value indicates that the investment is earning more than the minimum required rate of return. 3. The internal rate of return is the...
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  • Financial Management Decisions
    . Popular methods of capital budgeting include net present value (NPV), internal rate of return (IRR), discounted cash flow (DCF) and payback period. Cash flow projections are similar to the creation of budgets; however, unlike a budget, it is used to forecast a company’s cash income and expenditures...
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  • Woodside
    Internal rate of return 5.3 Payback period 5.4 Costs versus benefits 5.5 ROI sensitivity 5.6 Qualitative and intangible benefits 5.7 Future opportunities 6. Conclusion 7. Appendix 7.1 AVEVA background 7.2 Woodside background 7.3 Cost and benefit breakdown 1 3 3 5 5 5 7 7 7 9 10 10 10 10 11 11 12 12...
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  • Phuket Beach Hotel
    . However, both metrics (PI and AvgROI), result in conclusions contrary to both the calculated Payback Period and Discounted Payback Period. Net Present Value and Internal Rate of Return Both NPV and IRR consider all cash flows, the time-value of money, risk, and unlike the previous metrics...
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  • Management of Technology Resources
    in thousands 0 1 2 3 4 5 6 7 8 9 Year Cost/Benefit Timeline in Excel Financial Metric Calculations !   Payback  Period   !   Return  on  Investment  (ROI)   !   Net  Present  Value  (NPV)   !   Others   Payback Period...
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  • Motivation
    Proposal -4 5 Proposal -5 5 Calculate the IRR of proposal one to five: 7 Requirement: 2 10 Calculate the Profitability Index (PI): 10 Requirement: 3 12 Discuss Other Factors: 12 Requirement: 4 13 IRR is more effective then NPV 13 ϖ Superiority of net present value: 13 References 14...
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  • Capital Budgeting: Advantages and Limitations
    can be classified in two ways. First, is to create one category for benefits that affects levels on the profit and loss statement directly. Secondly, specify benefits that may not be as easily measured on a statement of profit and loss. Net Present Value (NPV), Payback Period, Internal Rate of Return...
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  • Importance of Payback Method in Capital Budgeting Decision
    Flows Discounted Payback Period Economic Rate of Return Internal Rate of Return Net Present Value Payback Method Payback Period Weighted Average Cost of Capital Chapter 1 INTRODUCTION 1 1.0 Introduction The payback method is commonly used for appraisal of capital budgeting investments in...
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  • Capital Budgeting
    rate of return method 3. payback method 4. internal rate of return method (Mott and Graham 2008, p. 207). The first two methods are considered the common non-discounting criteria, whilst the other two are the most popular discounting criteria. (Chandra, 2011). 1 Net Present Value...
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  • Traditional Capital Budgeting Models
    payback period, the accounting rate of return (ROI), the cost–benefit ratio, the net present value, the profitability index, and the internal rate of return (IRR). The Payback Method The payback method is quite simple: It is a measure of the time required to pay back the initial investment of a...
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  • Financial Management
    the discount rate that equates the present value of the future net cash flow from an investment project with the project’s initial cash outflow” Advantage  Clearly shows the profitability of the investment. Disadvantage  Doesn't take account of the fact that future returns may be less...
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  • Creative Industry for Young Entreprenuers in Pakistan
    hybrid methods are used as well, such as payback period and discounted payback period. Contents[hide] * 1 Net present value * 2 Internal rate of return * 3 Equivalent annuity method * 4 Real options * 5 Ranked Projects * 6 Funding Sources * 7 External links and references | [edit] Net...
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  • Phuket Beach Case
    Incremental Cash Flows 1. Weighted Average Cost of Capital = %Equity x Rate + %Debt x Rate x 1-tax rate WACC = [75 *.12] + [25*.10* (1-.30)] = 10.75% Discount rate = discount factors at 10.75% WACC 2. Net Income The Income Statements, Cash Flows, Net Present Value, Internal...
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  • Capital Invest
    consider cash flows after the payback period and it does not consider the time values of money; a common practice is to use this method to select from projects with similar rates of return that have been evaluated using a discounted cash flow method referred to as the Payback Method based on...
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