Evidence of abnormal rate of return on project

Assignment Help Financial Management
Reference no: EM13915237

In a capital budgeting context, explain how a positive NPV is evidence of an “abnormal” rate of return on a project.

Words limit.............

Reference no: EM13915237

Questions Cloud

Design a real time flood monitoring system : Design a Real Time Flood Monitoring System based on Arduino Microcontroller.The system should monitor flood related information like Water level and Precipitation.The data collected from the sensors should be transferred to a client application via i..
Capital budgeting accept-reject decisions : Do the NPV and IRR methods always agree with respect to capital budgeting accept-reject decisions? Answer and explain.
Financial statements : these financial statements items are for chen comapny
What accounts normally have debit balances : What accounts normally have debit balances? What accounts normally have credit balances?
Evidence of abnormal rate of return on project : In a capital budgeting context, explain how a positive NPV is evidence of an “abnormal” rate of return on a project.
What is the difference between the general journal : What is the difference between the general journal and special journals?
Most part the market for financial securities : Briefly explain the following statement: For the most part the market for financial securities is efficient while the market for capital budgeting ideas is not.
Do all companies close their books on december 31 : Do all companies close their books on December 31? Why or why not?
Discount rate being used will equal the projects irr : Explain the following statement: “When the NPV of a project = $0, the discount rate being used will equal the project’s IRR.” Use math to explain your answer. Hint: Equations 10-1 and 10-2 may help with the math.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the annualized yield on the dollar deposit

The treasurer of a U.S company has $1,000,000 to invest for 30 days. A 30-day euro deposit yields 2.00 percent. The present exchange rate of € is $1.1550. What is the annualized yield on the dollar deposit in the euro market if the exchange rate of €..

  What break-even resale price in three years

After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years..

  The expected return on any asset is dependent upon its beta

The expected return on any asset is dependent upon its beta. Explain what Beta is, why it is used and its relevance to investment decisions.

  Why are derivatives important to the financial community

Why are derivatives important to the financial community? Does the government regulate the market? How can there be such a meltdown?

  The hedge ratio of an at-the-money call option on ibm

The hedge ratio of an at-the-money call option on IBM is 0.17. The hedge ratio of an at-the-money put option is ?0.54. What is the hedge ratio of an at-the-money straddle position on IBM? (Negative value should be indicated by a minus sign. Round you..

  What is the discounted payback period for these cash flows

An investment project has annual cash inflows of $4,300, $4,000, $5,200, and $4,400, and a discount rate of 13 percent. What is the discounted payback period for these cash flows if the initial cost is $7,900?

  Security a has a beta of 10 and an expected return of 12

security a has a beta of 1.0 and an expected return of 12. security b has a beta of 0.75 and an expected return of 11.

  Does a principal-agent relationship exist among the parties

Kenny Willis and his neighbours, Rick and Joyce Taylor, were good friends. Rick helped Kenny repair his truck and Kenny cut the Taylors’s yard because they did not own a lawnmower. Does a principal-agent relationship exist among the parties?

  Record the entry for the issuance of the bonds

Dillard Co. issued $20,000,000 of 5-year, 14% callable bonds on April 1, 2014, at a market rate of 12%. Interest is payable semi-annually on September 30 and March 31. Record the entry for the issuance of the bonds. Record the entries for interest pa..

  What is the maximum it would be reasonable

What is the maximum it would be reasonable ( i.e., do no financial harm) for the owner of a building to pay for a new heated drive way system if it would save $1,500 per year in ploughing charges. The owner's cost of money is 15%/yr. Assume the syste..

  What is self-supporting growth rate

Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,500,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  Yield to maturity remains constant

Chick-Fil-A bonds currently sells for $1,025. They have a 9 year maturity, and 8% annual coupon, and a par value of $1,000. Assume that the yield to maturity remains constant for the next 3 years. What is the price 3 years from today?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd