Question: please help. thank you! Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of


Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criterla that generally lead to good investment decisions. Consider this case: Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,500,000. The project is expected to generate the following net cash flows: Celestal Crane Cosmetics's weighted average cost of capiat is 10\%, and project Beta has the same risk as the firmis average progect. Based on the cash fows, what is project Beta's NPV? $872,266$1,272,266$3,772,266$797,266 Making the accept or reject decision Celestial Crane Cosmetics's decision to accept or reject project Beta is independent of its decisions on other projects. If the firm follows the NpV method, it should project Beta. Suppose your boss has asked you to analyze two mutually exclusive projects-project A and project B, Both projects requlre the same investment amount, and the sum of cash inflows of Project A is larger than the sum of cash inflows of project B. A. coworker told you that you don' need to do an NPV analysis of the projects because you already know that project A will have a larger NPY than project B. Do you agree with your coworker's statement? No, the Npr calculation wil take into account not only the projects' cash inflows but also the timing of cash inflows and outflows. Consequentiy, project B could have a targer NPY than project A, even though project A has Iarger cash inflows. No, the NPV calculation is based on percentage refurns, so the size of a project's cash flows does not affect a project's NPV. Yes, project A will always have the largest NPV, becouse its cash inflows are greater than project Bs cash inflows. Making the accept or reject decision Celestial Crane Cosmetics's decision to accept or reject project Beta is independent of its decisions on other projects. If the firm foliows the NPV method, it should project Beta. Suppose your bos ad you to analyze two mutually exclusive projects - project A and project B. Both profects require the same investment amount, and the : ih inflows of Project A is larger than the sum of cash inflows of project B. A coworker told you that you don't need to do an NPP analysis of t because you already know that project A will have a larger NPV than project B. Do you agree with your coworker's statement? No, the NPV calculation will take into account not only the projects' cash inflows but also the timing of cash inflows and outflows. Consequently, project B could have a larger NPV than project A, even though project A has larger cash inflows. No, the NPV calculation is based on percentage returns, so the size of a project's cash flows does not affect a project's NPV. Yes, project A will always have the largest NPV, because its cash inflows are greater than project Bs cash infows
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