COST ACCOUNTING
PERFORMANCE MEASUREMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Initial amount of project was $ 20, 000 and net cash flow the project of year 1:$ 5, 000; year 2:$ 6, 000; year 3:$ 8, 000; year 4:10, 000. The MIRR
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16%
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15%
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20%
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23%
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Explanation:
Detailed explanation-1: -Formula. Initial cash flows = FC+WC-S + (S-B) * T Here, FC = fixed capital, WC = working capital, S = Salvage value, B = Book value, T = Tax rate.
Detailed explanation-2: -Payback Period = 1, 00, 000/20, 000 = 5 years.
Detailed explanation-3: -A 12-month cash flow forecast shows a company its expected liquidity situation, i.e. how high its income and expenses will be in the next 12 months. This corresponds to long-term liquidity planning and is an important planning tool for start-ups as well as for companies already firmly established in the market.
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