Stand-Alone Principle. Suppose a financial manager is quoted as saying, “Our firm uses the stand-alone principle. Because we treat projects like minifirms in our evaluation process, we include financing costs because they are relevant at the firm level.” Critically evaluate this statement
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Stand-Alone Principle. Suppose a financial manager is quoted as saying, “Our firm uses the stand-alone principle. Because we treat projects like minifirms in our evaluation process, we include financing costs because they are relevant at the firm level.” Critically evaluate this statement
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- 1. Explain the concept of performance evaluation and control system.2. Enumerate the advantages of performance evaluation and control system.3. Explain the rationale of transfer pricing.4. What is return on investment, and how is it calculated?5. What are the advantages and limitations of return on investment?6. What are the measurement issues to be concerned about when using return on investment?7. Define productivity.8. Why is it important for a firm that follows a strategy of being the cost leader to improve productivity?9. What is incentive compensation?10. What type of organization is best suited to incentive compensation plans?Customers define the scope of the project, and ultimately, project success rests in their satisfaction. True false Question -1. Successful project managers tend to adopt a hands-on approach to managing projects. True false Question - 2. In terms of commonly traded organizational currencies, being involved in a task that has a large significance andAs a financial manager,;one's goalsfor the client is to help them dothe following EXCEPT: A. Build credit by encouraging them to acquire as many loan as possible so that the firm value or the total asset of the firm will increase.B. Identify investment opportunities and determine whether these are acceptable to their risk preference.C. Determine ways to reduce non-value adding costsD. Create budgets that would enable them to determine excess or inadequacy of cash.
- What is the difference between systematic and unsystematic risk?ii. What is strategic business plan and why it is important for the success of a firm? Explain inyour own words.iii. Explain for which types of projects, a detailed capital budgeting analysis is required and why?Which of the following theory is applicable to the following situation? A manager needs to raise funds to finance a new project and prefers to use internal financing. Group of answer choices signaling theory trade off theory MM Proposition pecking order theoryInternal Rate of Return is used: a) To determine the interest rate at which benefits of a project are equivalent to its costs. b) To determine which investment to choose when one of two alternatives must be chosen. c) To determine the interest rate for an investment that yields no income. d) To choose an investment that necessary to preserve the operation of the business. e) To justify a “lost-leader” project of a strategic nature.
- What are the recommendation of an investment center manager if the company will use the method of return on investment?What is return on investment, and how is it calculated? What are the advantages and limitations of return on investment? What are the measurement issues to be concerned about when using return on investment? Define productivity. Why is it important for a firm that follows a strategy of being the cost leader to improve productivity? What is incentive compensation? What type of organization is best suited to incentive compensation plans?Which statement below best describes an investment center? a. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply. b. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply, and significant control over the amount of invested capital. c. The authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply. d. The authority to provide specialized support to other units within the organization. e. The responsibility for developing markets for and selling of the output of the organization.
- Cost benefit analysis allows a business owner to identify the investment alternative with the highest return. True Falsa. Outline the three main forms of business organisation and critically discuss the benefits and drawbacks associated with each.b. Discuss and critically compare sensitivity analysis and scenario analysis as means of estimating a project’s risk.c. Clearly explain the difference between systematic risk and non-systematic risk and discuss the relationship between beta and the expected rate of return on an investment.Explain how you would evaluate the expected rate of return from the investment (purchasing a company) and the method to evaluate the investment decision. Assess the disadvantages and advantages of the investment method and why the method would provide the most accurate measure for the anticipated rate of return requirement. Justify your recommendation.