Which investment to accept

Related BrainMass Solutions

• Importance of IRR and NPV in capital budgeting/planning

  The NPV is important to a project because it is a mechanism used by managers to evaluate which projects they should accept and which projects they should reject based on the probably return to the organization as a result of their investment decisions

• Which of the following statements abot investment decision

  d) the internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return.

• Cash Flow & Discount Rate

  This solution is comprised of a detailed explanation to answer if the discount rate is 7%, which of the following is true.

• Depreciation tax shields

  Project A Project B Initial Investment 100,000 100,000 Year 1 40,000 10,000 Year 2 40,000 10,000 Year 3 40,000 75,000 Year 4 40,000 85,000 23. If the discount rate is 7%, which of the following is true: a.

• Payback period, NPV, IRR , accounting rate of return

  = 30,030 =10000x3.002958 Initial investment= $30,000 Therefore NPV= $30 =30030-30000 which is close to zero IRR= 24.25% which is more than the required rate of return of 12% Therefore,

• Issue preferred stock at what price; NPV & IRR of projects

  proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000.

• Discount rate;investment with the cash flow

  This post shows how to calculate discount rate and discusses about the investment with the cash flow

• Project Costs: IRR, NPV, Profitability Index, Investments

  Which investment is best overall? Why? NPV criterion implies that you should accept project A while payback period IRR and the profitability index imply that you should accept project B.

• What are the various financial tools used to evaluate capital projects?

  This rule does not involve discounting which means that time value of money is disregarded, it fails to consider risk differences, and an accurate cutoff period cannot be picked.

• mutually exclusive investments

  That is, which projects would you accept in spending the $80,000?