Calculate npv and irr
[DOC File]Chapter 9 Making Capital Investment Decisions
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IRR is the interest rate that causes NPV for a series of cash flows to be zero. NPV is preferred in all situations to IRR; IRR can lead to ambiguous results if there are non-conventional cash flows, and also ambiguously ranks some mutually exclusive projects.
Learn How to Calculate NPV and IRR in Excel | Excelchat
Calculate the project’s Payback, NPV, and IRR (base-case). Scenario analysis: Suppose the company believes that all of its estimates (sale quantity, price, variable cost/unit, and fixed cost) are …
[DOC File]Problems and Solutions e.edu
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The net present value (NPV) of selling the old machine and purchasing the new machine in five years is -631,636. Since the NPV of Option 2 is higher than the NPV of Option 1, the firm will choose to sell the old equipment and purchase new equipment in five years. 7.29 SAL 5000
[DOC File]CAPITAL BUDGETTING
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Virunga Co uses the net present value (NPV) method, the internal rate of return (IRR) method and discounted payback period (DPP) to appraise its new investment opportunities. An investment opportunity was recently appraised using each of these methods and was estimated to provide a positive NPV of $10·5 million, an IRR of 15% and a DPP of ...
[DOC File]Multiple Choice Questions
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B) The internal rate of return method . C) The book rate of return method . D) Net present value method . E) All of the above have value additivity property . Answer: D. Type: Difficult. Page: 93 5. If the net present value of project A is +$80, and of project B is +$60, then the net present value of the combined project is: A) +$80 . B) +$60 ...
[DOC File]Exam-type questions
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5. If the NPV is –ve , the project proposal will be rejected. If the NPV is 0 or +ve the proposal can be accepted. 6. If the projects are ranked, the project with the maximum NPV should be chosen. 1. Calculate NPV of the 2 projects and suggest which of the 2 projects should be accepted assuming a discount rate of 10%. Project A Project B
[DOCX File]CHAPTER 8
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Apply the five-year annuity formula to calculate the NPV of the racket project. Subtract the initial investment. NPV = C0 + C1 ATr = -$1,500,000 + $234,360 A50.13 = -$675,701.68. Expected: Calculate the NPV of the expected scenario. First, determine the yearly cash flow. To determine the number of rackets sold, multiply the market size by the ...
[DOC File]Chapter 7: Net Present Value and Capital Budgeting
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b. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. c. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the risk-free rate. d. The NPV method does not consider the inflation premium. 16.
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