It is one of the simplest investment appraisal techniques.. The complete assignment consists of 11 pages (including this page). PDF Payback period questions and answers pdf Q1a,b Advantages and . The correct advice is given by the NPV method, however, and so the investment project is financially acceptable. Unlike net present value and internal rate of return method, payback method does not take into account the time value of money. PV 1 = PMT . Email Us tyres2u247@gmail.com. 7. 1. It makes us uncomfortable, a little superstitious and maybe even a little nauseous. Answer: Annual . Since it was established five years ago it has gradually increased its range of plain and cheese biscuits. Download Ebook Payback Period Questions And Answers Payback Period Questions And Answers Thank you definitely much for downloading payback period questions and answers.Maybe you have knowledge that, people have see numerous time for their favorite books later this payback period questions and answers, but stop taking place in harmful downloads. Data Source and Method of Collection The author used theories on payback period method and past research work which companies used in appraising investment and he has used it as secondary data in order to be able to answer the questions raised in the research hypothesis. 2. What is the project payback period if the initial cost is $3,200? Problems and Solutions The payback period The payback method helps firms establish and identify a maximum . Solution (a) Payback method. You have already made it so far and we . Payback Period. Payback Method multiple choice questions and answers PDF: If an initial investment is $765000, payback period is 4.5 years, then increase in future cash flow will be, with answers for online colleges for business administration. Read Online Payback Period Questions And Answers Payback Period Questions And Answers If you ally habit such a referred payback period questions and answers books that will provide you worth, get the categorically best seller from us currently from several preferred authors. Download Project Management Notes, PDF, Books, Syllabus for MCOM 2021. P9-1. It doesn't consider the time value of money. ARR - Project C. What is the average rate of return (ARR) of project C? TherefoÑ, Payback period 5,000 = 5 years + 8,000 = 5.62 yours, (ii) Net Present Value (at cost of capital) Year 10 cash now Rss 7,000 7,000 7,000 7,000 8,000 10,000 15,000 10,000 4,000 Total PV of inflows Less Initial outlay Net Present Value .751 .683 .621 *513 .386 Scanned with CamScanner The pages in the answer must be ordered and numbered, and be supplied with name, CPR-number and course . Since cash flow estimates are quite accurate for periods in the near future and relatively inaccurate for periods in distant future due to economic and operational uncertainties . SK Manufacturing Company uses discounted payback period to evaluate investments in capital assets. Dec 12 Q4b. appraisal techniques - short answer questions ; Quantitative factors - numerical questions (1) Quantitative factors - numerical questions (2) Investment appraisal - quantitative factors - numerical questions 2 Ahandbook is really a user's guide to operating the . (5 marks) b) Payback method. Welcome to the 8th resort. Payback is perhaps the simplest method of investment appraisal.The payback period is the time it takes for a project to repay its initial investment.Payback is used measured in terms of years and months, though any period could be used depending on the life of the project (e.g. Multiple choice questions and answers on bonds and bond valuation MCQ questions PDF covers topics: Bond valuation calculations, changes in bond values over time, coupon bonds, financial bonds, key characteristics of bonds, maturity risk premium, risk free rate of return, risk free savings Payback period questions and answers pdf Capital budgeting is one of the main functions in finance management. Solutions to Questions and Problems 1. Multiple Choice Questions and Answers. Payback Period. It makes us uncomfortable, a little superstitious and maybe even a little nauseous. 2) b. This uses various techniques to assist management in selecting one project over another. Home; About; Service; Offers; Contact; Testimonials; Blog; Blog Details P9-1. Access Free Payback Period Questions And Answers Payback Period Questions And Answers This is likewise one of the factors by obtaining the soft documents of this payback period questions and answers by online. Chapter 9 Capital Budgeting Techniques Solutions to Problems Note to instructor: In most problems involving the internal rate of return calculation, a financial calculator has been used. Net Present Value of a machine is A. PV of cash inflows less cost of investment B. PV of cash inflows ÷ cost of . Notice that if you use the shortcut for annuity cash flows, you get: Payback = $6,500 / $765 = 8.50 years This answer does not make sense since the cash flows stop . Answer outline and marking scheme for question: 1. Accounting book payback period: 2 years + (130 ÷ 160) × 12 months = 2 years and 10 months Economics book payback period: 3 years exactly Payback: considerations • The Accounting book is clearly preferable on the payback method of investment appraisal, although the Economics book pays back only two months later. During the course of business, the management comes across various opportunities that lead to the expansion of existing projects or new projects. 9 Constant annuity N = 10 years PV = $5000 at year 0 (now) r 1(annually) = 6% for first 3 years Then, suddenly change interest policy: r 2(annually) = 8% for last 7 years What is the PMT of today? The questions in this document are in a format similar to what will appear on midterm #3, . B is best. LG 2: Payback Period Basic (a) $42,000 ÷ $7,000 = 6 years (b) The company should accept the project, since 6 < 8. Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. Capital budgeting decisions are of: a) Long term nature b) Short term nature c) Both of the above d) None of the above. Roten Manufacturing Company is considering an investment on a machine for producing auto parts. - All the questions are 100% valid and stable. Question 1. Q2b. Decision Criterion Using Payback Period • For independent projects: Accept if s is less than or equal to some fixed threshold . The sales director has now come to the board with a proposal to expand the range further into chocolate coated biscuits . 3) d. 4) c. 5) c. This series is a combination of a present sum and a uniform series, and so it can be solved as . Payback period questions and answers We know no one wants to talk about accepting the will. The purpose of this paper is to show that for a given capital budgeting project the cash flows to which the Payback Period rule is applied are different from . Machine B: (8,000 + 24,000 + 32,000 + 1/3 of . C. does not properly consider the time value of money . The payback period is the period (a) a project takes to pay back the loan taken to purchase the capital assets. D. provides a measure of li. The future cash flows are used at face value . TherefoÑ, Payback period 5,000 = 5 years + 8,000 = 5.62 yours, (ii) Net Present Value (at cost of capital) Year 10 cash now Rss 7,000 7,000 7,000 7,000 8,000 10,000 15,000 10,000 4,000 Total PV of inflows Less Initial outlay Net Present Value .751 .683 .621 *513 .386 Scanned with CamScanner Colourful slides, animations, video links, fun activities, as well as questions (with answers provided) are all included in this engaging and informative lesson on calculating the payback period, applicable to all syllabi. You have 4 hours to answer all questions. (1 mark) Calculate the . Most Sensitive variable as given by the Sensitivity Analysis should be: (a) Ignored . Payback = 2.75 years 2. A is best. Net Present Value of a machine But here you are, reading about the will (even if it gives you an eerie feeling in the pit of your stomach). You might not require more grow old to spend to go to the ebook instigation as with ease as search for them. Because the discounted cash flow values are smaller (i.e., money is worth less overtime) in this case, the discounted payback period is longer than the payback period. + CF s ≥−CF 0 = I0 In words, s is the minimum length of time such that the sum of cash flows from a project is positive. Unlike net present value and internal rate of return method, payback method does not take into account the time value of money. Posted by October 31, 2020 Leave a comment on payback period questions and answers ppt October 31, 2020 Leave a comment on payback period questions and answers ppt The discounted payback period is found by first calculating the present values of each future cash flow. LG 2: Payback Period Basic (a) $42,000 ÷ $7,000 = 6 years (b) The company should accept the project, since 6 < 8. Year Cash Flow 0 $6,400 1 $1,600 2 $1,900 3 $2,300 4 $1,400. Data Source and Method of Collection The author used theories on payback period method and past research work which companies used in appraising investment and he has used it as secondary data in order to be able to answer the questions raised in the research hypothesis. Payback period: Machine A: (24,000 + 32,000 + 1 3/5 of 40,000) = 2 3/5 years. Determine the cash payback period. The payback period is the amount of time required for cash inflows generated by a project to offset its initial cash outflow. Notice that the total cash inflows after eight years will be: Total cash inflows = 8($765) = $6,120 If the initial cost is $6,500, the project never pays back. You have already made . Question Bank is a free tool which allows you to create practice question papers from thousands of WJEC past paper questions. B is fastest. Using the Payback Method. If the initial cost is $3,400, the payback period is: Payback = 4.10 years For the $3,400 cost, the payback period is: Payback = 4.10 years For an initial cost of $4,450, the payback period is: Payback = 5.36 years The payback period for an initial cost of $6,800 is Total cash inflows = $6,640 If the initial cost is $6,800, the . If you cannot give a complete answer to a question, try to give a partial answer. What is the project payback period if the . Project Management study material includes project management notes, book, courses, case study, syllabus, question paper, MCQ, questions and answers and available in project management pdf form. Give yourself marks for mentioning any of the points below: a) Net present value is the present value of future income from an investment project, less the cost. If you desire to humorous books, lots of novels, tale, jokes, and more fictions collections are along with launched . If the initial cost is $3,400, the payback period is: Payback = 4.10 years For the $3,400 cost, the payback period is: Payback = 4.10 years For an initial cost of $4,450, the payback period is: Payback = 5.36 years The payback period for an initial cost of $6,800 is Total cash inflows = $6,640 If the initial cost is $6,800, the . Payback is perhaps the simplest method of investment appraisal.The payback period is the time it takes for a project to repay its initial investment.Payback is used measured in terms of years and months, though any period could be used depending on the life of the project (e.g. P9-2. 7 years is greater than the maximum target discounted payback period of two years and so from this perspective the investment project is not financially acceptable. Capital budgeting is also known as: a) Investment decisions making b) Planning capital expenditure c) Both of the above d) None of the above. (Round to one decimal place.) ANS: C . We provide complete project management pdf. Jun 11 Q2b. (5 marks) If a project with conventional cash flows has payback period less than its life, can you definitively state the algebraic sign of the NPV? 10. Solution: Step 1: In order to compute the payback period of the equipment, we need to workout the net annual cash inflow by deducting the total of cash outflow from the total of cash inflow associated with the equipment. But here you are, reading about the will (even if it gives you an eerie feeling in the pit of your stomach). So we dodge the topic left and right and put off taking the will again. 5 mins read. It has the lowest payback period (just) of 2 years and 8 months and also has the best ARR figure at 22%. View Answer. 3,000 / (1 + .10) 1 = 2,727 Question 16-96536 A company is considering the purchase of a Principally, when computing the payback period, an assumption is made that any cash flow that occurred within a certain period was realized consistently and continuously all through that period, and not at a particular point in time. You have already made it so far and we . Download File PDF Payback Period Questions And Answers payback period is over 3 years and the project is a no-go! Payback period reasoning suggests that project should be only accepted if the payback period is less than a cut-off period (payback period set by the business).So let us look at our . #PAYBACK PERIOD QUESTIONS AND ANSWERS #Download file | read online payback period questions and answers Latest GAQM APM-001 Associate in Project Management Exam Questions & Answers - This is the latest practice test to pass the GAQM APM-001 Associate in Project Management Exam. Chapter 9 Capital Budgeting Techniques Solutions to Problems Note to instructor: In most problems involving the internal rate of return calculation, a financial calculator has been used. Notice that the total cash inflows after eight years will be: Total cash inflows = 8($765) = $6,120 If the initial cost is $6,500, the project never pays back. Payback Period Questions and Answers | Study.com The payback period for Alternative A is 3.125 years (i.e., 3 years plus 1.5 months). Principally, when computing the payback period, an assumption is made that any cash flow that occurred within a certain period was realized consistently and continuously all through that period, and not at a particular point in time. B is the best choice. 1. Use payback method for your answer. The ratio can be used for breakeven analysis and it+It represents the marginal benefit of producing one more unit. Which project? In Sensitivity Analysis, the emphasis is on assessment of sensitivity of (a) Net Economic Life, (b) Net Present Value, (c) Both (a) and (b), (d)None of (a) and (b) 14. Multiple Choice Questions (MCQ) on Payback Method quiz answers PDF, solve cost accounting MCQ worksheet to practice mock test. A fun (and very popular with my students!) Download Free Payback Period Questions And Answers Payback Period Questions And Answers If you ally habit such a referred payback period questions and answers book that will meet the expense of you worth, acquire the unconditionally best seller from us currently from several preferred authors. Return on investment. The author used empirical studies and personal judgment to analyze data from the selected countries on how often the . You should use a discount rate of 10%.. You have already made . (d) over which the project will be getting operating cash inflows. Which of the following statement is not true for capital budgeting? (b) equal to the useful life of the machines (c) a project takes to recover its initial cash outflow. A significant advantage of the payback period is that it: A. places emphasis on time value of money. So we dodge the topic left and right and put off taking the will again. but instead of the number of units to cover fixed . Question 1. Answers. It makes us uncomfortable, a little superstitious and maybe even a little nauseous. PAYBACK PERIOD QUESTIONS AND ANSWERS PDF Payback period is the number of years required to recover the cost of project or initial cash out flows.