File Name: net present value questions and answers .zip
Net present value method also known as discounted cash flow method is a popular capital budgeting technique that takes into account the time value of money.
- 8-1 Solutions to Chapter 8 Net Present Value and Other Investment ...
- Net Present Value (NPV)
- CHAPTER 7 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA Answers to Concept Questions
Learn cash flow analysis, net present value, profitability index test prep for online bachelor degree programs in business administration. Practice merit scholarships assessment test, online learning net present value quiz questions for competitive in business majors to learn free online courses. MCQ : In capital budgeting, the positive net present value results in.
8-1 Solutions to Chapter 8 Net Present Value and Other Investment ...
Est time: 01— Even though project B has the higher IRR, its NPV is lower than that of project Awhen the discount rate is lower as in Problem 1 and higher when the discount rate ishigher as in Problem 3. This example shows that the project with the higher IRR isnot necessarily better. The IRR of each project is fixed, but as the discount rateincreases, project B becomes relatively more attractive compared to project A. This is an unusual case, however, since it is rare forthe initial investments to be equal.
The net present value problems take various forms. This problem gives after-tax cash flows. Other problems give pre-tax cash flows, tax rates, depreciation schedules, and so forth. The opportunity cost of capital is the after-tax rate. The opportunity cost of capital is What is the net present value of the project?
Net Present Value (NPV)
in question) makes NPV negative. So, D is the correct answer. 7. In independent projects evaluation, results of internal rate of return and net present value lead.
CHAPTER 7 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA Answers to Concept Questions
It equals the present value of the project net cash inflows minus the initial investment outlay. It is one of the most reliable techniques used in capital budgeting because it is based on the discounted cash flow approach. Net after-tax cash flows equals total cash inflow during a period, including salvage value if any, less cash outflows including taxes from the project during the period. The initial investment outlay represents the total cash outflow that occurs at the inception time 0 of the project. The present value of net cash flows is determined at a discount rate which is reflective of the project risk.
The benefit of debt is that you can: A. Paid Cash for Purchase of Land b. Finance companies can accumulate capital by doing what? Why do some commercial property sellers insist on seller financing when a buyer can easily qualify for a bank loan?
The examiner's style is to test this area of the syllabus as partof a much larger question. Usually, a part c , or part d , you willhave to discuss or explain some of the key aspects and theirimplications. Stakeholder groups and corporate governance. Minicorp is a mining company.
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