Question
In: Finance
The Net Present Value method of project evaluation is preferred over the Internal Rate of Return...
The Net Present Value method of project evaluation is preferred over the Internal Rate of Return method because the Net Present Value method:
a. Considers the time value money where IRR does not.
b. Considers the risk of the project where the Internal Rate of Return does not.
c. Includes all the cash flows in its decision where IRR does not.
d. Considers the timing of the cash flows where the Internal Rate of Return does not.
e. Assumes a more realistic reinvestment rate assumption than IRR.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
1. Discuss the difference between the net present value and the internal rate of return evaluation...
1. Discuss the difference between the net present value and the
internal rate of return evaluation methods.
2. For companies in the newspaper business, what is the
opportunity cost of not having a Web presence?
Cite at least one reference and 300 words
min.
Internal rate of return and net present value are related in that: Internal rate of return...
Internal rate of return and net present value are related in
that:
Internal rate of return formed the basis for the eventual
development of the net present value theory.
Internal rate of return finds a discount rate that produces a
net present value of zero.
Net present value formed the basis for the eventual development
of the internal rate of return theory.
Net present value can only be used to evaluate irregular cash
flows, whereas internal rate of return can...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$180,000
$360,000
2
180,000
360,000
3
180,000
360,000
4
180,000
360,000
The wind turbines require an investment of $466,020, while the
biofuel equipment requires an investment of $1,027,800. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$390,000
$740,000
2
390,000
740,000
3
390,000
740,000
4
390,000
740,000
The wind turbines require an investment of $1,184,430, while the
biofuel equipment requires an investment of $2,112,700. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year
Wind
Turbines
Biofuel Equipment
1
$390,000
$740,000
2
390,000
740,000
3
390,000
740,000
4
390,000
740,000
The wind turbines require an investment of $1,184,430, while the
biofuel equipment requires an investment of $2,112,700. No residual
value is expected from either...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Style Networks Inc. is considering two TV show
projects. The estimated net cash flows from each project are as
follows:
Year
After Hours
Sun Fun
1
$320,000
$290,000
2
320,000
290,000
3
320,000
290,000
4
320,000
290,000
After Hours requires an investment of $913,600, while
Sun Fun requires an investment of $880,730. No residual
value is expected from either project.
Present Value...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and
Analysis for a Service Company
The management of Advanced Alternative Power Inc. is considering
two capital investment projects. The estimated net cash flows from
each project are as follows:
Year Wind Turbines Biofuel Equipment
1 $420,000 $800,000
2 420,000 800,000
3 420,000 800,000
4 420,000 800,000
The wind turbines require an investment of $1,275,540, while the
biofuel equipment requires an investment of $2,284,000. No residual
value is expected from either...
Net Present Value Method and Internal Rate of Return Method for a service company Keystone Healthcare...
Net Present Value
Method and Internal Rate of Return Method for a service company
Keystone Healthcare
Corp. is proposing to spend $128,960 on a seven-year project that
has estimated net cash flows of $31,000 for each of the seven
years.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589...
Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media...
Net Present Value Method, Internal Rate of Return Method, and
Analysis
The management of Quest Media Inc. is considering two capital
investment projects. The estimated net cash flows from each project
are as follows:
Year
Radio Station
TV Station
1
$270,000
$490,000
2
270,000
490,000
3
270,000
490,000
4
270,000
490,000
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3...
Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media...
Net Present Value Method, Internal Rate of Return Method, and
Analysis
The management of Quest Media Inc. is considering two capital
investment projects. The estimated net cash flows from each project
are as follows:
Year
Radio Station
TV Station
1
$320,000
$610,000
2
320,000
610,000
3
320,000
610,000
4
320,000
610,000
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3...
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