Why do the payback period analysis fail to recognize the difference between the present and future value of money?

Q: Does the payback-period analysis ignore differences in the timing of cash flows?

A: The time value of money (TVM) is the possibility that in view of its inevitable procuring influence,…

Q: what is the most likely fair value method to utilize the Discountd Cash Flow model?

A: Discounted Cash Flow: The discounted cash flow model,estimates the intrinsic value of a security…

Q: How can we find the present worth of any uneven stream of payments?

A: The question is based on the concept of present value of uneven cash flow

Q: a. what is the difference between the discount rate used for net present value and the internal rate…

A: Discount rate used for net present value is rate which investor want to earn from a project . It is…

Q: what are usefulness and weakness of discounted cash flow method?

A: Discounted Cashflow Method is the Method in which we compare Initial Project cost with expected…

Q: How would a reduction in the cash conversion cycle increase profitability?

A: Cash conversion cycle (CCC): It is a metric that speaks to the time it takes for a business…

Q: Is the value of money affected by time, and if it is, in which direction? O a. It is not affected O…

A: The value of time of money is the idea that the money currently available is worth more than the…

Q: Explain and critically evaluate advantages and disadvantages of fiat money.

A: US dollar, Australian dollar, New Zealand dollar,..... are all fiat currencies , meaning that the…

Q: What are the similarities between the time value of money formulas and the NPV analysis?

A: The similarity between time value of Money Formula And Net present value analysis.  There are a lot…

Q: How can we calculate the present worth of actual dollars?

A: Present worth is the current value with a respective rate of return, of a future measure of cash or…

Q: What happens to the present value of some fixed dollar amount to be received in the future as time…

A: Present value of some fixed dollar amount  is obtained by discounting the future cash flows using an…

Q: time value of money to general situations where compounding is induced by growth, inflation, or…

A: Time Value of Money is one of the most important concepts of finance when it comes to the…

Q: Why is the free cash flow valuation model so widely used?

A: With the free cash flow of the firm, administrators will focus on potential businesses that increase…

Q: How would discounted cash flow be applied to fair vaue valuations?

A: Valuation of a company means to determine the intrinsic value of a company or the value which the…

Q: o you think a person would opt to use the Payback Period Method instead of the Net Present Value or…

A: Given information : . NPV refers to the difference between the sum of the present value of expected…

Q: What is the purpose and workings of the Monetary policy transmission mechanism (MPTM)? What are the…

A: Monetary transmission technique or the mechanism is referred to as the process through which the…

Q: What role do incremental cash flows play in a replacement analysis?

A: Answer: Introduction: Replacement analysis is one of the key analyses in the concept of capital…

Q: O Payback does not consider the time value of money

A: Capital projects refer to a project which is helpful in maintaining and improving the asset of the…

Q: What should be done to find the equivalent present worth of the actual dollar amount?

A: Present value is the concept of discounting future value to bring it to today’s worth.

Q: What is the fundamental argument behind using an opportunity cost as a discount factor in computing…

A: Opportunity cost: This term is very general and can be used on any normal day to day situation. For…

Q: ow do you think today's low interest rate environment is impacting the time value of money? How…

A: Time Value of Money: It refers to the concept which tells the value of money is worth more than in…

Q: Explain the significance of time value of money in financial valuation?

A: Time value of money means the value of a sum of money in future is not the same as the value of…

Q: What is the process of solving a cash flow for an unknown interest rate?

A: Time Value of Money: According to the concept of TVM, the company always interested to know the PV…

Q: What is discounting and why do we discount future cash flows?

A: A cash flow statement is a financial statement that shows how much cash and cash equivalents are…

Q: Where does the discount rate from present value came from? How to solve it?

A: In finance, a reduction rate is that the rate of come wont to discount future money flows back to…

Q: What is difference between The earnings multiplier and Discounted cash flow model (DCF)? kindly…

A: Valuation is the process of determining fair value of an asset or a firm. There are various methods…

Q: How does time affect the value of money?

A: Time value of money: Time value of money refers to the concept that the value of money available at…

Q: appropriate option (i) The rate of return method does not take care of timings of returns. (ii)…

A: Investment appraisal techniques are used to identify whether to invest or not in the project.   Rate…

Q: Why inflation is considered and have effect in present value?

A: Inflation is the increase in the general price level of the country. It is an important indicator of…

Q: PRESENT VALUE FORMULA Please provide the formula for finding the Present Value of money and explain…

A: Definition:   Time value of money: Time value of money refers to the concept that the value of money…

Q: How would an increase in the interest rate or a decrease in the number of periods until the payment…

A: Interest rate is defined as an amount of an interest due per period as the proportion of amount,…

Q: A change in money demand or a shift in the money demand curve is caused by a change in * the…

A: the increase demand of money shift the demand curve up.

Q: When does the present economy studies do or use? a. When interest rate is not given b. When time…

A: Economy studies is defined as the study, which used to provide the framework as well as the ten most…

Q: Based on your understanding of the fAactors that affect the cost of money, Identify which of the…

A: Higher inflation rate would lead to higher interest or nominal rate on the borrowed amount. This is…

Q: Which of the following methods does not adjust for the time value of money: A internal rate of…

A: Capital Budgeting is a financial analysis technique which is used to evaluate the profitability of…

Q: “The greater the discount rate, the greater the present value of a future cash flow.” True or false?…

A: Present Value: The value of today's amount expected to be paid or received in the future at a…

Q: What is the relationship between a discount rate (or IRR) and a capitalization rate? What causes…

A: Introduction: The discount rate is nothing but a rate that reduces potential cash flows in order to…

Q: Explain the traditional model of money demand

A: Demand for money is required for Private Consumption. It results in Gross Domestic Product. GDP is…

Q: What is a “required rate of return”? Why is it called the “cost ofmoney” or the “price of money”?

A: The required rate of return can be calculated by two methods, 1) Gordan's growth model  Gordan's…

Q: What Is The Difference Between Real Money & Nominal Money?

A: Real money: It refers to the supply of nominal money that is adjusted with respect to the variation…

Q: Lowering the discount rate on a cash flow will its present value.

A: Discount Rate: It is the rate at which the cash flows over the period are discounted.