Financial Management - Study Mode

[#561] In independent projects evaluation, results of internal rate of return and net present value lead to
Correct Answer

(C) same decisions

Explanation

Solution: In independent projects evaluation, results of internal rate of return and net present value lead to cost decision. An Independent Project Evaluation is the evaluation of an individual project designed to achieve specific objectives within specified resources, in an adopted time span and following an established plan of action, often within the framework of a broader programme.

[#562] In internal rate of returns, discount rate which forces net present values to become zero is classified as
Correct Answer

(D) internal rate of return

Explanation

Solution: In internal rate of returns, discount rate which forces net present values to become zero is classified as internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

[#563] Projects which are mutually exclusive but different on scale of production or time of completion then the
Correct Answer

(B) net present value of method

Explanation

Solution: Projects which are mutually exclusive but different on scale of production or time of completion then the net present value of method. Net Present Value (NPV) is defined as the present value of the future net cash flows from an investment project.

[#564] Graph which is plotted for projected net present value and capital rates is called
Correct Answer

(D) net present value profile

Explanation

Solution: Graph which is plotted for projected net present value and capital rates is called net present value profile. The net present value mainly measures the net increase in the company's equity by working on a project. It is essentially the difference between the present value of cash flows and the initial investment based on the discount rate.

[#565] A modified internal rate of return is considered as present value of costs and is equal to
Correct Answer

(C) PV of terminal value

Explanation

Solution: A modified internal rate of return is considered as present value of costs and is equal to PV of terminal value. The present value (PV) of the terminal value is then added to the PV of the free cash flows in the projection period to arrive at an implied firm value.