Purchase Solution

Net Present Value as a capital budgeting tool

Not what you're looking for?

Ask Custom Question

Financial decision that you have made. Could you have used NPV to make this decision? Would you have made the same decision if you had used NPV analysis?

Purchase this Solution
Solution Summary

Responses discusses the utility of Net Present Value as a capital budgeting tool

Solution Preview

NPV could be used to make this decision.

As per Investopedia "Net Present Value is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. NPV analysis is sensitive to the reliability of future cash inflows that an investment ...

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Motivation

This tests some key elements of major motivation theories.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Decentralised Budgeting

    The two critical requirements for accurate capital budgeting estimation are: 1) Accurate cash flows 2) Discount rate Example of one capital budgeting tool: One example is net present value (NPV), which provides the value addition done by the project

  • capital budgeting tools

    A. Net Present Value and Internal Rate of Return are two common capital budgeting tools. 1. Net Present Value: This tool measures the difference in value between present cash flow, and the value represented by present cash outflow.

  • Pros and cons of financial tools

    Financial tools are capital budgeting techniques that are utilized in coming up with a capital budgeting decision. These could serve as a guide whether a potential project should be pursued or not.

  • Discussing the Concepts of Present Value and Capital Finance

    Several capital budgeting techniques such as the Net Present Value Method, Discounted Payback Method, and Profitability Index use present values to facilitate analyses.

  • Long Term Financing Analysis: Capital Investment & Analyses

    What do the results of net present value and internal rate of return analysis tell senior managers of an organization? Would sensitivity analysis be a useful tool for assessing this capital project's risk and return?

  • Strengths and Weaknesses of Capital Budgeting Techniques

    Net present value is used as capital budgeting technique with regard to acceptance or otherwise of the purchase of equipment, expansion of industrial undertaking etc., If the net present value is positive, the project will be accepted.

  • Forecasting and Valuing Cash Flows: NPV or IRR

    The authors present the merits of capital budgeting model like Net Present Value and Internal Rate of Return. If you are a Budgeteer, which method would you favor and why?

  • Sunshine Corporation Capital Budgeting - Project Selection

    Determine the net present value and the profitability index for each project. 2. Which projects are acceptable using the profitability index as a screening tool? 3.

  • Comparing capital budgeting techniques

    Net present value is used as a capital budgeting technique with regards to acceptance or rejection of the purchase of plant or machinery or equipment, expansion of industrial undertaking by adding extra facilities, etc.

View More Related Solutions