Demerits of profitability index method, Financial Management

Assignment Help:

Q. Demerits of profitability index method?

Demerits of PI method:-

(i) This method is complicated to understand and implement

(ii) Calculations in this method are complex.

(III) Internal Rate of return Method (IRR):- IRR method is as well known as marginal efficiency of capital, time adjusted rate of return, marginal productivity of capital and yield on investment.

Like the NPV method the IRR method as well takes into consideration the time value of money by discounting the cash flows. IRR is the discount rate at that present value of cash inflows is equal to the present value of cash outflows.


Related Discussions:- Demerits of profitability index method

State the several goals for the organisation, State the several goals for t...

State the several goals for the organisation As there could be several goals for the organisation, we must try and summarise theorganisational goals in financial terms so that

Futures and forward, what factors influence the decision to use futures or ...

what factors influence the decision to use futures or forwards contracts

Rationale for mergers-product advantages, Product Advantages: A firm th...

Product Advantages: A firm that has developed a reputation for superior products in the domestic market may find acceptance from the foreign consumers as well. Hence, such firm

Explain the incremental cash flows of a capital project, Explain what is me...

Explain what is meant by the incremental cash flows of a capital project. Incremental cash flows are defined by the change in total firm cash inflows and cash outflows which ca

Assessing impact on management risk, Assessing Impact: As with the asse...

Assessing Impact: As with the assessment of likelihood, a valuable way of assessing impact would be the creation of categories of impact as follows: Level

Why do businesses spend time effort and money, Why do businesses spend time...

Why do businesses spend time, effort, and money to produce forecasts?  Explain. Businesses fail or succeed depending on how well prepared they are to deal with the situations t

APR and EAR, Assume a bank charges a 15.5% APR (annual percentage rate) on ...

Assume a bank charges a 15.5% APR (annual percentage rate) on credit card holder compounds quarterly. What EAR (effective annual rate) is the bank is charging? What if they change

Baumol, To what extent does empirical evidence on corporate objectives supp...

To what extent does empirical evidence on corporate objectives support the predictions of Baumol’s “Sales Maximisation Hypothesis?”

Which banking regulators use in supervising banks, Question 1: In the f...

Question 1: In the financial system, the capital markets consist of the Bond and the Equities Market. Develop this statement. Question 2: (a) Discuss why banking regula

Identification the management risk, Identification the management risk: ...

Identification the management risk: The first and most essential aspect of risk management is recognising what events may occur within a business.  It is only when all the poss

Write Your Message!

Captcha
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