Question

The NPV profile can be used to: (Select all correct answers.) a) Perform sensitivity analysis. b)...

The NPV profile can be used to: (Select all correct answers.)

a) Perform sensitivity analysis.

b) Identify negative NPV projects.

c) Identify the IRR.

d) Identify positive NPV projects.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


All of the following are correct:

a) Perform sensitivity analysis.

b) Identify negative NPV projects.

c) Identify the IRR.

d) Identify positive NPV projects.

Reason:

a) Perform sensitivity analysis. – Different rates of discounting can be used to see different NPV values

b) Identify negative NPV projects. – NPV profiling shows negative NPV projects

c) Identify the IRR. – At NPV = 0 we have IRR = Cost of Capital or Required rate

d) Identify positive NPV projects. - NPV profiling shows positive NPV projects

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following statement is correct? Select one: a. All the answers are incorrect. b....
Which of the following statement is correct? Select one: a. All the answers are incorrect. b. A positive NPV means that the firm’s value will decrease if the project is adopted because the new project’s estimated return is lesst than the firm’s required rate of return. c. Reject the project if the IRR is greater than or equal to the required rate of return. d. Payback period is the discount rate that forces the NPV to equal zero. e. All...
Choose all the correct answers that apply to IRR (a) PWDR which causes the NPV to...
Choose all the correct answers that apply to IRR (a) PWDR which causes the NPV to be equal to zero (b) Projects can have only one IRR (c) an IRR>PWDR indicates a possible investment (d) an IRR<PWDR indicates a possible investment
What is sensitivity analysis? For an investment opportunity with a positive expected NPV, how can the...
What is sensitivity analysis? For an investment opportunity with a positive expected NPV, how can the results from sensitivity analysis be used to determine whether or not to invest?
The Basics of Capital Budgeting: NPV Profile A project's NPV profile graph intersects the Y-axis at...
The Basics of Capital Budgeting: NPV Profile A project's NPV profile graph intersects the Y-axis at 0% cost of capital and intersects the X-axis at the project's -Select-paybackMIRRIRRCorrect 1 of Item 1 (where NPV = 0). The Y-axis intersection point represents the project's undiscounted NPV. The point at which 2 projects' profiles cross one another is the crossover rate. The crossover rate can be found by calculating the -Select-IRRpaybackMIRRCorrect 2 of Item 1 of the differences in the projects' cash...
The NPV profile of two mutually exclusive projects can be useful in identifying: the interest rates...
The NPV profile of two mutually exclusive projects can be useful in identifying: the interest rates in which an investor would prefer one to the other, the profile would also indicate a possible interest rate in which an investor is indifferent between the alternatives. the optimal payback period of the projects given the investors criteria the interest rate that the investor should choose to evaluate the projects All of the above answers are correct.
Which of the following distinguishes scenario analysis from sensitivity analysis? a. Scenario analysis only applies to...
Which of the following distinguishes scenario analysis from sensitivity analysis? a. Scenario analysis only applies to new product development projects. b. Sensitivity analysis only applies to new product development projects c. Sensitivity analysis involves changing one project variable at a time while scenario analysis involves changing more than one project variable at the same time d. Sensitivity analysis only applies when projects are mutually exclusive. 3. Which of the following statements is true regarding the internal rate of return (IRR)?...
Time Proj A Proj B 0         (1,000,000)         (500,000) 1               100,000     &
Time Proj A Proj B 0         (1,000,000)         (500,000) 1               100,000           300,000 2               300,000           150,000 3               400,000           100,000 4               500,000              50,000 a) Calculate the IRR for each project and the incremental IRR (if it exists). Round your answers to 2 decimal places. b) Calculate the NPV for each project using a discount rate of 8% c) If these projects are mutually exclusive, and a discount rate of 8% is used, identify...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index. Project A Project B Project C Project D Project E Project F Project G NPV= $4,711 ($711) ($657) $334 $9,842 $7,360 ($3,224) IRR= 44.51% 5.47% 8.06% 12.98% 22.56% 17.19% 5.47% MIRR= 25.23% 7.50% 8.97% 11.57% 16.26% 13.70% 7.50% PI= 2.178 0.822 0.945 1.028 1.394 1.294 0.871 The discounting rate (r)...
Positive net present value projects can be secured by all of these answers are correct. ensuring...
Positive net present value projects can be secured by all of these answers are correct. ensuring access to superior distribution networks. none of these answers are correct. blocking entry for newcomers. establishing a cost advantage over competitors.
Which of the following statements are correct? a. Consider a project that generates a negative cash...
Which of the following statements are correct? a. Consider a project that generates a negative cash flow in year 0 and a positive cash flow in year 1. The NPV rule will always lead to the same decision for this project as the IRR rule. b. Higher NPV projects have longer payback periods. c. Two projects with identical expected cash flows but different risk profiles have the same IRR. d. IRR is affected by the scale of the investment opportunity.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT