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Demerits of Pay Back Method:-
(i) It ignores the Cash Flows after the Pay Back Period: - The main shortcoming of this method is that it completely ignores all cash inflows subsequent to the payback period.
(ii) It ignores the Time Value of Money: - Another deficit of the payback method is that it ignores the time value of money. This method delight a rupee received in the second or third year as valuable as a rupee received in the first year.
(iii)It doesn't give the Accept-Reject Decision in case of single project: - If presume the payback period is 4 years the method doesn't provide an answer as to whether the project will be accepted or rejected.
(iv) It ignores cost of Capital: - Cost of capital isn't taken into consideration under this method.
(v) It disregards the Profitability of a Project.
evaluate the importance of leverage in financial management of a small scale company
Q. Show Factors influencing participation? Factors influencing participation: several research studies have shown that the intensity of participation depends on four factors.
Profitability Ratios Profit Margin It is a measure of the profit margin of the company. This is important to gauge the financial position of the company.
Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000. Andrew believes it can get a rating of A from
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They are issued in the local market by a domestic borrower and are usually denominated in the local currency. For example, US companies issuing bonds to US reside
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