Topic/Area for Discussion
“Capital Budgeting”
Due date: 26 january, 2016
Total Marks 5
Discussion Question:
IRR and NPV techniques are widely used by corporate managers to evaluate different investment projects. You have learned these techniques in detail in the course of Business Finance. Now, discuss briefly the following questions with conceptual rationale.
- Why do we generally prefer NPV over IRR for evaluating every investment proposal?
- Following are the results of two mutually exclusive projects. Which project should be accepted and why?
Important Instructions:
- Your discussion must be based on logical facts.
- Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
- Obnoxious or ignoble answer should be strictly avoided.
- Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.
Best Of Luck!~
ACC501 solution 2016
NPV method entirely depends on estimated cash flows as it is a discount rate which tries to make NPV of cash flows of a project equal to zero. If you are using this method to make a decision between two projects, then accept the project if the IRR is greater than the required rate of return.....
Ans no 2. The firm which required rate of return is higher than that firm is better which required rate of return is high than the other firm A means project A because required rate of return of Project A is higher
Ans no 2. The firm which required rate of return is higher than that firm is better which required rate of return is high than the other firm A means project A because required rate of return of Project A is higher
NPV method entirely depends on estimated cash flows as it is a discount rate which tries to make NPV of cash flows of a project equal to zero. If you are using this method to make a decision between two projects, then accept the project if the IRR is greater than the required rate of return.....
Ans no 2. The firm which required rate of return is higher than that firm is better which required rate of return is high than the other firm A means project A because required rate of return of Project A is higher
Ans no 2. The firm which required rate of return is higher than that firm is better which required rate of return is high than the other firm A means project A because required rate of return of Project A is higher
ACC501 - Business Finance GDB No. 2 Solution Fall 2015 Due Date Tuesday, January 26, 2016
ACC501 - Business Finance GDB No. 2 Solution Fall 2015 Due Date Tuesday, January 26, 2016
Discussion Question:
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IRR and NPV techniques are widely used by corporate managers to evaluate different investment projects. You have learned these techniques in detail in the course of Business Finance. Now, discuss briefly the following questions with conceptual rationale.
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