Present Value Questions And Answers Pdf


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CHAPTER 7 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA Answers to Concept Questions

Learn cash flow analysis, net present value, profitability index test prep for online bachelor degree programs in business administration. Practice merit scholarships assessment test, online learning net present value quiz questions for competitive in business majors to learn free online courses. MCQ : In capital budgeting, the positive net present value results in. MCQ : The project whose cash flows are sufficient to repay the capital invested for rate of return then the net present value will be. MCQ : The first step in calculation of net present value is to find out.

Net present value method also known as discounted cash flow method is a popular capital budgeting technique that takes into account the time value of money. It uses net present value of the investment project as the base to accept or reject a proposed investment in projects like purchase of new equipment, purchase of inventory, expansion or addition of existing plant assets and the installation of new plants etc. First, I would explain what is net present value and then how it is used to analyze investment projects. Net present value is the difference between the present value of cash inflows and the present value of cash outflows that occur as a result of undertaking an investment project. It may be positive, zero or negative.

Net Present Value (NPV) Calculation Steps

It equals the present value of the project net cash inflows minus the initial investment outlay. It is one of the most reliable techniques used in capital budgeting because it is based on the discounted cash flow approach. Net after-tax cash flows equals total cash inflow during a period, including salvage value if any, less cash outflows including taxes from the project during the period. The initial investment outlay represents the total cash outflow that occurs at the inception time 0 of the project. The present value of net cash flows is determined at a discount rate which is reflective of the project risk. In most cases, it is appropriate to start with the weighted average cost of capital WACC of the company and adjust it up or down depending on the difference between the risk of the specific project and average risk of the company as a whole. The first step involved in the calculation of NPV is the estimation of net cash flows from the project over its life.

Net Present Value Analysis is a financial cash flow analysis technique that helps in project selection. Moreover, NPV project selection criteria falls under the classification of benefit measurement method. Further, NPV analysis uses discounted cash flow technique to assess project profitability. In fact, major advantage of net present value method is that it uses the concept of time value of money. However, this post describes the essential NPV calculation steps.


Present Value Questions and Answers. Test your understanding with practice problems and step-by-step solutions. Browse through all study tools. Question.


Present Value (PV)

If money earns an annual rate of 6. How much is the interest earned? The family agrees to pay the loan off by making monthly payments over a 15 year period. How much should the monthly payment be in order to pay off the debt in 15 years? If the car can be financed over a period of 4 years at an annual rate of 6.

This new lottery, however, will pay out the award 60 years from today. How much did he originally borrow? Future Value and Present Value Tables.

Net Present Value (NPV)

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 Так что же вы предлагаете? - спросила Сьюзан. Она хотела только одного - поскорее уйти. Стратмор на минуту задумался. - Не спрашивай меня, как это случилось, - сказал он, уставившись в закрытый люк.  - Но у меня такое впечатление, что мы совершенно случайно обнаружили и нейтрализовали Северную Дакоту.  - Он покачал головой, словно не веря такую удачу.  - Чертовское везение, если говорить честно.

Танкадо имел основания ему верить. Стратмор замялся, не зная, что ответить. - Отключите ТРАНСТЕКСТ, - взмолилась Сьюзан.  - Мы нашли Северную Дакоту. Вызовите службу безопасности. И давайте выбираться отсюда. Стратмор поднял руку, давая понять, что ему нужно подумать.

Наконец-то. ГЛАВА 77 Стратмор остановился на площадке у своего кабинета, держа перед собой пистолет. Сьюзан шла следом за ним, размышляя, по-прежнему ли Хейл прячется в Третьем узле. Свет от монитора Стратмора отбрасывал на них жутковатую тень. Сьюзан старалась держаться поближе к шефу на небольшой платформе с металлическими поручнями. По мере того как они удалялись от двери, свет становился все более тусклым, и вскоре они оказались в полной темноте. Единственным освещением в шифровалке был разве что свет звезд над их головами, едва уловимое свечение проникало также сквозь разбитую стеклянную стену Третьего узла.

 - Прости, что я тебе лгал.

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a) Write a formula for the present value of this project with a discount rate of r. Answer: Since the annual interest rate a = 3%, compounded in m =

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