1. The net present value is the same as the profit of a project expressed in present dollars. Do you agree or disagree? Explain.
2. Explain the relationship between NPV and a firm's value.
3. What is the cost of capital? What role does it play in capital investment decisions?
4. What is the role that the required rate of return plays in the NPV model? In the IRR model?
5. Explain how the NPV is used to determine whether a project should be accepted or rejected.
6. The IRR is the true or actual rate of return being earned by the project. Do you agree or disagree? Discuss.
7. Explain what a postaudit is and how it can provide useful input for future capital investment decisions, especially those involving advanced technology.
8. Explain why NPV is generally preferred over IRR when choosing among competing or mutually exclusive projects. Why would managers continue to use IRR to choose among mutually exclusive projects?