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____ [38]
3 years ago
7

Which methods of evaluating a capital investment project use cash flows as a measurement basis?

Business
2 answers:
ruslelena [56]3 years ago
8 0

Answer:

Payback Period, Internal Rate of Return, and Net Present Value use cash flows for evaluating capital investment projects.

Explanation:

There are three methods of evaluating a capital investment project that use cash flows as a measurement. These include Payback Period, Net Present Value and Internal Rate of Return. The payback period gives the idea about the time that is required for a person to get back his initial investment. Internal rate of return is used to determine profitability of potential investment. Net present value refers to the difference between the present value of cash outflows and the cash inflows for a specific period of time.  

Further explanation:

The Payback period: In this method of payback period, it simply calculates the amount of time that it will take to get one’s original investment back. It helps in analyzing any risks related to investments. An investment with a lesser payback period is seen as a better investment because investor’s original expenses are at risk for a lesser time.

Internal rate of return:  Internal rate of return makes use of the discount rates which makes the present value of cash flows in future, equivalent to zero. This strategy helps in comparing the profitability of various investments in different projects.  

Net present value: The net present value method makes use of investor's requisite rate of return to compute the present price of future cash flow from the project. Net Present Value is used in creating capital budget and investment planning to estimate the profitability of the project.

Learn More:

Disadvantage of the payback period method : brainly.com/question/13168811 - (Stokholm)

Project acceptance when NPV is used brainly.com/question/13228231  - (Matiasemella)

Keywords:  

Capital investment project, cash flow, payback period, internal rate of return, net present value.

bixtya [17]3 years ago
6 0
The method <span>of evaluating a capital investment project that use cash flows as a measurement basis are: </span><span>Payback period, internal rate of return, and net present value.
- PAyback period, used to determine how much asset is back after the initial saving
- internal rate of return, Used to measure potential profit from an investment
- Net present value, used to determine the worth of all company's assets</span>
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Sales Promotions

Explanation:

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6 0
3 years ago
On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove
maria [59]

Answer:

$18,750

Explanation:

Income from investment = 25% * $75,000

Income from investment = 0.25 * $75,000

Income from investment = $18,750

The amount that will be reported by Poke as income from its investment in Shove for 20X8, if it used the equity method of accounting is $18,750

4 0
2 years ago
You try to start your car, but it does not start. Which of these is a prediction? You try to start your car, but it does not sta
tensa zangetsu [6.8K]

Answer:

What is wrong with my car?

Explanation:

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7 0
3 years ago
Which of the following statements is true concerning income if manufacturing production exceeds units sold?A higher operating in
vova2212 [387]

Answer:

A higher operating income will result under absorption costing

Explanation:

If manufacturing production exceeds units sold there will be an increase in inventory and increases in inventory cause income to be higher under absorption costing  than under variable costing.

Under variable costing, as its name suggests, only variable production costs are assigned to inventory and cost of goods sold.  

Under absorption costing, normal manufacturing costs are considered product costs and included in inventory.

<em>Recognize that a reduction in inventory during a period will cause the opposite effect. </em>

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4 0
3 years ago
During 2020, LAL Corp. had the following cash flows: (1) received cash of $5,000 billed to a customer in 2020; (2) earned $20,00
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Answer: $21,000

Explanation:

Financing activities refer to those that a company engages in, in relation to capital needed to run the affairs of the business which means it included Equity and Debt.

Financing Activities: Interest paid, dividends paid, money borrowed from bank, stock repurchase

Net cash flows from financing = Money borrowed from bank - Interest paid - dividends paid - Stock repurchase

= 50,000 - 6,000 - 8,000 - 15,000

= $21,000

4 0
3 years ago
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