What is the payback period statistic? What is the acceptance benchmark when using the payback period statistic? This is how long it takes to receive back the money of an investment. It does not use the time value of money, it does not work with variables of cash flow. It is a good choice when an investor needs their return in a certain time period.
Based on that, Corporation B is desirable to Corporation A as it has a greater net present value. The Internal Rate of Return (IRR) is defined as the discount rate that equates the present value of the project’s free cash flows with the project’s initial cash outlay (Keown, A. J., Martin, J. D., & Petty, J. W. (2014). Based on the Internal Rate of Return rule, an investment is suitable if the Internal Rate of Return exceeds the required return, it should be rejected otherwise. Based on that, Corporation B is preferred over Corporation A since the former has a higher Internal Rate of Return. Examining the above, the Net Present Value and the Internal Rate of Return are closely related.
1. Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability. The statement of cash flows is divided into operating, financing and investing activities, and then within each section, the sources and uses of the are provided in greater detail. Net cash provided by operating activities indicates the net sources and uses of cash in operating activities.
Net initial investment outlay which is investment cash and the sale of old equipment cash expenditures as well as net cash flows. Net salvage value which is the after tax net cash flow projects businesses will not use. The incremental cash flows are different because of the way Caledonia operates with the cash. 3. What is the project’s initial outlay?
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Nonetheless, Dell has a few reservations about illogical and impractical approaches proposed by the board. The company believes that stock options award should be regarded as compensation; however this understanding should not be exposed as an expense to the company, once this type of compensation is related to an equity distribution rather than using the company’s assets. Concerning the fair value, Dell does not agree with the presented methods of how to measure the fair value. For example, the lattice model would interfere with the understanding of the subject by the user of financial statements. Another disagreement between FASB proposal and Dell believes is related to the method of accounting for income taxes.
SciTronics’ profit as a percentage of sales in 2008 was 5.7 %. 2. This represented an increase from 3.4 % in 2005. 3. SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg.
Net Present Value, or NPV, combines two concepts of value. First, it determines how much cash will flow in as a result of the investment, and compares that against the cash that will flow out in order to make the investment. Since these flows take place over time, and often the investment will pay off much later, we also take into account the present and future value of