Questions from Cost Management

Q: Should the firm accept the independent projects described below? Why or

Should the firm accept the independent projects described below? Why or why not? (a) The firm’s cost of capital is 10% and the estimated internal rate of return (IRR) of the project is 11%. (b) A ca...

Q: Provide a short explanation of the modified internal rate of return (

Provide a short explanation of the modified internal rate of return (MIRR) financial performance metric. How does MIRR differ from IRR? (In addition to the discussion in the text, see, for example, ww...

Q: What decision criterion should be used to choose investment projects for a

What decision criterion should be used to choose investment projects for a firm with unlimited funds available at a weighted-average cost of 10% (after tax)? Can the firm use the same decision criteri...

Q: When analyzing a proposed capital investment, what conditions or factors may

When analyzing a proposed capital investment, what conditions or factors may lead the results to differ between the net present value (NPV) and internal rate of return (IRR) decision models?

Q: How does the size of the initial investment affect the indicated internal

How does the size of the initial investment affect the indicated internal rate of return (IRR) and net present value (NPV) of a proposed investment?

Q: In what ways can accountants add value to the capital budgeting process

In what ways can accountants add value to the capital budgeting process?

Q: What is the analytic hierarchy process (AHP), and how can

What is the analytic hierarchy process (AHP), and how can it be used in making capital budgeting decisions?

Q: Given an asset with a net book value (NBV) of

Given an asset with a net book value (NBV) of $25,000, what are the after-tax proceeds for a firm in the 34% tax bracket if this asset is sold for $35,000 cash? What are the after-tax proceeds for thi...

Q: In capital budgeting analysis, what is meant by the income tax

In capital budgeting analysis, what is meant by the income tax effect? Give three examples of the tax effect pertaining to the acquisition of new factory (manufacturing) equipment.

Q: What are the limitations of the payback period method for making capital

What are the limitations of the payback period method for making capital budgeting decisions (e.g., whether to accept or reject a proposed investment)? Does the present value payback period overcome t...