Please describe NPV, IRR and their relationship. How do you evaluate each for making an investment...

Please describe NPV, IRR and their relationship. How do you evaluate each for making an investment decision? If you were developing a capital budgeting process at your employer, how would you prioritize your projects? What is the NPV when IRR = WACC, IRR>WACC, and IRR<WACC? There is a duplex for sale in Absecon for $700,000 at this time. It has 2 units that generate a total of $25,000 in gross rent. The property taxes are $4,000, commercial property insurance is $2,000, flood insurance is $1,000, and annual maintenance is $2,000. You expect to sell it in one year at a price growth of 0%. What is the NPV with a WACC of 10%. Is the IRR greater or less than the WACC? Would you invest in this project and why?

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jeff jeffy answered 2 years ago

How do you calculate IRR for an investment

How do IRR and NPV interact to evaluate capital projects? What are some difficulties in estimating...

How do IRR and NPV interact to evaluate capital projects? What are some difficulties in estimating cash flows?

Discuss: Evaluate the strengths and limitations of NPV and IRR methods. Also, compare NPV and IRR.

Describe the decision rules for NPV and IRR. How do changes in the WACC affect the...

Describe the decision rules for NPV and IRR. How do changes in the WACC affect the outcome of these decisions? (There are 4 parts to this question. 1-2 sentences each) NPV decision rule: Impact of changes in WACC on NPV rule: IRR decision rule: Impact of changes in WACC on IRR rule:

how do you answer a capital bugeting question ? NPV Profiles ? IRR?

How does the NPV, IRR and the payback period of an Investment usually react to the...

How does the NPV, IRR and the payback period of an Investment usually react to the following developments (please indicate, UP/DOWN or N/A)? 1. Increasing Investment amount 2. Increasing tax rate 3. Increased annual depreciation due to change of depreciation method 4. Increasing cost of capital 5. Increasing residual value So I actually Need 15 indications (5*3) - TIA

How would you describe capital investment decision making and its relationship with long-range planning decision making?

1. Describe the relationship between the IRR and the discount rate when NPV=0. 2. Given the...

1. Describe the relationship between the IRR and the discount rate when NPV=0. 2. Given the following information, should a company invest in a given capital? Initial Investment $675,000 Annual Cash Inflow $158,000 Salvage Value $80,000 Years of life of the equipment and project: 6 Minimum required rate of return: 10% Depreciation $99,167 Payback Period in Years 4.3 Accounting Rate of Return 8.72% NPV $27,553.5 IRR 11.32%

How do net present value (NPV) and internal rate of return (IRR) relate to each other...

How do net present value (NPV) and internal rate of return (IRR) relate to each other mathematically? How does modified internal rate of return (MIRR) compare to internal rate of return (IRR)?

You have calculated the NPV and IRR for two investment projects based on the costs and...

You have calculated the NPV and IRR for two investment projects based on the costs and cash flows, but you can only select the best one to choose between project A, and Project B. Based on the following data, which one will you select, and why? Project A Project B NPV : $10,000 $9,000 IRR : 10% 12%

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