Question

1. Report how the NPV can change as you change the inputs in the equation. 2....

1. Report how the NPV can change as you change the inputs in the equation.

2. Report at least two scenarios in which the NPV is good and the NPV is bad.

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Answer #1

1.NPV NET PRESENT VALUE can change when the discounted rate of intrest or PVIF IS CHANGED .NPV considers the time value of money. The value of NPV changes with the change in value of the PVIF and the discounted cash flows

2. IF NPV IS GREATER THAN OR EQUAL TO ZERO THE THE PROJECT CAN BE ACCEPTED, NPV is found after considering the time value of money thus the value can be compared

IF NPV IS LESS THAN ZERO PROJECT CAN'T BE ACCEPTED.Application of this method necessitates cash flow and discount rate Thus the accuracy lies on these factors

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