Study

Budgeting

  •   0%
  •  0     0     0

      Back   Restart
  • What does sensitivity analysis help investors understand?
    The effect of changes in key assumptions on investment outcomes
  • What is the primary limitation of the Payback Period method?
    ) It does not account for cash flows after the payback period
  • What is the main purpose of capital budgeting?
    evaluate and select long-term investment projects that will maximize shareholder value.
  • Which method calculates the present value of future cash flows?
    Present Value
  • A budget is…….
    financial plan that outlines expected revenues and expenditures over a specific period, usually a Year
  • What does NPV stand for?
    Net Present Value
  • Which method provides the most accurate measure of an investment’s profitability?
    Net Present VALUE
  • What is the primary goal of capital budgeting
    Maximizing shareholder value
  • What is the main purpose of calculating the Internal Rate of Return
    To evaluate profitability against the cost of capital
  • Which method focuses on the time it takes to recover an initial investment
    Payback period
  • The discount rate used in NPV calculations typically reflects:
    The firm’s cost of capital
  • What does IRR stand for?
    Internal Rate of Return
  • What does a positive NPV indicate?
    The investment is risky
  • Which capital budgeting method does not consider the time value of money?
    Payback period
  • Which capital budgeting method is expressed as a ratio of discounted cash inflows to initial investment
    Profitability Index
  • Capital budgeting involves…………..
    Analyzing the costs,risks, potential returns
    • Your experience on this site will be improved by allowing cookies.