Treatment of finance charges in project evaluation

Assignment Help Financial Management
Reference no: EM131303691

Which of the following statements is the correct treatment of finance charges in project evaluation?

a) Finance charges should be excluded from a project's net cash flows and included in the discount rate.

b) Finance charges should be included in a project's net cash flows and excluded from the discount rate.

c) Finance charges should be included in a project's net cash flows and in the discount rate.

d) None of the given options.

Reference no: EM131303691

Questions Cloud

Does your abstract state the aims and scope of your review : Does your Abstract state the aims and scope of your review? Does it summarize major research on your topic? Does your Introduction present the scientific issue and give a rationale for your review?
What is an agnostic or atheist : What arc some basic beliefs of Christians, Muslims and Jews? What arc three things that are common amongst Christians. Muslims and Jews?How does the Buddhist view of God differ from some other religions?What is dhanna and karma as practiced by Buddhi..
Long-term implications to company earning-balance sheet : What are some long-term options of financing? Pick one option and defend it above the rest. Be sure to comment on short-term and long-term implications to the company’s earning and balance sheet.
Understanding the costs of capital is important : Understanding the costs of capital is important. How can you compute the cost of debt? What about the cost of common equity? What are some examples ?
Treatment of finance charges in project evaluation : Which of the following statements is the correct treatment of finance charges in project evaluation?
Computes the inner product of two lists : Write and test a function shuffle(myList) that scrambles a list into a random order, like shuffling a deck of cards.
A force f is applied at the tip of the uniform bar element : A force F is applied at the tip of the uniform bar element shown in the figure.- Compare the tip displacement with that from the linear elastic model when (a) E = 700 MPa and (b) E = 70GPa.
Fixed costs of this product and variable costs per unit : Gork Musical Instruments produces several products, one of which is facing increasing competition from cheaper, plastic alternatives. It expects that in coming years the number of units sold will fall by 10% pa.  Gork expects that in the coming years..
Provide an analysis of technologies social implications : Social and ethical implications. Without disclosing your personal view about this technology, provide an analysis of its social and ethical implications.

Reviews

Write a Review

Financial Management Questions & Answers

  Wireless network is providing connectivity to local resident

A wireless network is providing connectivity to the local residents. To increase the bandwidth, they are considering the three bandwidth shown below (in $1000 unites). Assume a life of 20 years and a MARR of 8% per year to determine which alternative..

  What is the annual percentage rate for this financing

Symco Corp. needs $500,000 for 90 days to get through a period of unexpectedly high oil prices. Symco's line of credit with the bank allows the company to borrow at 6% per year with a compensating balance of 10% of the amount borrowed. What is the an..

  How are recovery rates usually defined

How are recovery rates usually defined? - Explain the difference between an unconditional default probability density and a hazard rate.

  Appropriate expression for the value of the levered firm

What is the appropriate expression for the value of the levered firm? -  What is the appropriate expression for the weighted average cost of capital?

  Common stock is expected to pay a dividend

Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year (D1 =$3.00); its beta is 0.8; the risk-free rate is 5.2%; and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, a..

  Art sound systems targeted at young professional market

HRM manufactures state of the art sound systems targeted at the young professional market. Analysts following HRM Corporation predict that the company’s earnings and dividends will continue to grow at 14 percent for the next period. What is the value..

  Describe standard deviation of rate of return on biotech

The payoff is uncertain as well: The present value of profits could be as high as $500 million or as low as $30 million. The risk-free is rate 10%, and the standard deviation of rate of return on biotech products is 35%. The patent's life is estim..

  What is the net present value and internal rate of return

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$579,000 1 209,000 2 152,000 3 217,000 4 196,000 All cash flows will occur in Erewhon and are expressed in dollars...

  Using the straight-line method over its economic life

Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $81.4 million. The equipment will be fully depreciated using the straight-li..

  Explain the basic principles of cash flow estimation

Compute the relevant initial outlay in this capital budgeting decision - Should the company invest in this new equipment?

  Expansion project-required rate of return on the project

Cochrane, INC., is considering a new three-year expansion project that requires an intial fixed asset investment of 2,340,00. The fixed asset falls into the three-year MACRS class. The project is estimated to generate 2,230,000 in annual sales, with ..

  Buy the premium mustang convertible

Ford Motor Company's current incentives include 4.7 percent APR financing for 72 months or $1,100 cash back on a Mustang. Let's assume Suzie Student wants to buy the premium Mustang convertible, which costs $34,000, and she has no down payment other ..

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