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a. What is the future worth of each alternative investment? b. What is the decision rule for judging the attractiveness of investments based on future worth?
Problem: Explain the major components, advantages, and disadvantages of a master budget.
Evaluating NPV vs. IRR vs. Payback period Provide debate points for the pros and cons of each of the methods of evaluating projects.
Penny purchased $3,000 worth of furniture from Bob's Furniture Shop. Through an arrangement with Bob, Penny financed the purchase through a financing company
What is capital planning? Why is the internal rate of return important to an organization? Why is net present value important to a project?
In a memo to the CFO, discuss the metrics, and make a recommendation regarding whether the company should accept or reject the project.
Locate an example of a company with a low-cost business model. What is the online offering? What are their key threats?
DEFINE AND EXPLAIN CAPITAL BUDGETING WITH A BRIEF EXPLANATION OF 1. Discounted payback period 2. NPV 3. IRR
He does remember that the machine has a projected life of 12 years. Based on these data, the annual cost savings are:
What is this project's modified internal rate of return?
Critically discuss this statement: 'In essence, capital budgeting is a matter of selecting the correct decision rule'.
Why is understanding a variance from a budget so important? Why is capital budgeting done separately from a company operating budget?
(1) Draw a time line to show the cash flows of the project. (2) Compute the project's payback period, net present value (NPV), profitability index (PI)
You are asked to evaluate a new product line to replace an existing product that is at the end of its product life cycle.
Compute the IRR for the new outlay. (Note: There are two solutions! One is 787%. Find the other one.)
Q1. Calculate the NPVs based on WACCs of 5% and 7% Q2. What are the IRRs based on the WACCs?
Why is risk analysis so essential to capital budgeting decisions?
You have an investment opportunity that requires an initial investment of $7,500 today and will pay $11,000 in one year. What is the IRR of this opportunity?
Contrauct the annual cash flows and calculate the NPV and PI for a project with the given information above.
With a 40% tax rate, analyze the project using payback, discounted payback, NPV, IRR and MIRR.
Create a sample WBS in MS Project with level 2 categories of initiating, planning, executing, monitoring, controlling, and closing.
You can undertake only one project. If your cost of capitol is 8%, use the incremental IRR rule to make the correct decision.
Your company is seriously considering investing in a new project opportunity, but cas flow is tight
What is the internal rate of return (IRR) of this investment, assuming the yield to maturity does not change?
List and describe the four main investment appraisal methods. Which one is the best method to evaluate a risky investment and why?