1 Describe the Net Present Value (NPV) method for determining a capital budgeting project 's desirability What is the acceptance benchmark when using NPV 2 What is the payback period statistic What is the acceptance benchmark when using the payback period statistic 3 Describe the Internal Rate of R...

1 Net Present Value NPV NPV compares the value of a dollar today to the value of that same dollar in the future taking inflation and returns into acco ...

1. Describe the Net Present Value (NPV) method for determining a capital budgeting project's desirability. What is...

Question:

1. Describe the (NPV) method for determining a project's desirability. What is the acceptance benchmark when using NPV?
2. What is the statistic? What is the acceptance benchmark when using the statistic?
3. Describe the (IRR) method for determining a project's desirability. What is the acceptance benchmark when using IRR?
4. Describe the Modified (MIRR) method for determining a project's desirability. What are MIRR's strengths and weaknesses?
5. Compute the NPV statistic for Project Y and tell [advise] whether the firm should accept or reject the project with the cash flows shown below if the appropriate is 12 percent.
Project Y

Time Cash Flow -S11,000 S1,520 $3,350 $4,180 $2,000

6. Compute the payback period statistic for Project B and decide whether the firm should accept or reject the project with the cash flows shown below if the maximum allowable payback is three years.
Project B

Time 3 Cash Flow |-$11,000 $3,350 $4,180 S1,520 $950 $1,000

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...