Purchase Solution

Which Type of Company Might give the Most Accurate NPV

Not what you're looking for?

Ask Custom Question

Net Present Value

How accurate do you think a company's estimates of the net present value of a proposed project are? Refer to both the initial investment and to the components of the cash flow: revenues, operating expenses, depreciation, taxes, and the cost of capital to use for the computation of the present value.

Keep in mind that Net Present Value (NPV) is the value in today's dollars of cash flows to be received some time in the future minus what we have to pay today to get those cash flows.

Which of the following do you think would give you the most accurate NPV calculation:

(a) a brand new retail startup
(b) a pharmaceutical company introducing a new drug
(c) a company with a successful product in Chile trying to introduce it to the USA.

Purchase this Solution

Solution Summary

The solution discusses which type of company might give the most accurate NPV calculation.

Solution Preview

Answer:

Among the three options, a pharmaceutical company introducing new drug can give the most accurate NPV calculation. This is because of the experience, as the ...

Solution provided by:
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution


Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Motivation

This tests some key elements of major motivation theories.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.