When would you use net present value

    • [DOC File]Solver for Capital Budgeting - Furman

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      (a.) What is the City of Paranoya’s net present value for the decision described above? Use the total cost approach. (b.) Should the City of Paranoya purchase the new system or keep the old system? Level: Medium LO: 1 Ans: (a.) (b.) Keep the old system; the net present value of the costs under the old system is lower than for the new system. 92.

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    • [DOC File]Chapter 7: Net Present Value and Capital Budgeting

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      The present value break-even point is 20,532 units. The following represents a different approach to solving present-value break-even problems, unlike the EAC method used in problems 8.8 and 8.7. Both the EAC approach and this approach will yield the same answer. First, determine the cash flow from selling the old harvester.

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    • [DOC File]Present Value and IRR - DePauw University

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      Most corporations want to undertake projects that contribute the greatest net present value (NPV), subject to limited resources (usually capital and labor). Let’s say that Microsoft is trying to determine which of 20 software projects it should undertake. The NPV (in millions of dollars) contributed by each project, as well as the capital (in ...

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    • Net Present Value (NPV) Definition

      The net present value (NPV) of selling the old machine and purchasing the new machine now is-$1,606,950. Option 2. Sell old machine in five years and purchase new machine in five years. The company will have to make the scheduled maintenance costs for the old machine. Use a five-year annuity, discounted at 12 percent to find the present value ...

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