Web30. Normal Projects S and L have the same NPV when the discount rate is zero. However, Project S's cash flows come in faster than those of L. Therefore, we know that at any discount rate greater than zero, L will have the higher NPV. a. True b. False ANSWER: False RATIONALE: We can see from the graph that S has the higher NPV if r > 0. WebNormal Projects Q and R have the same NPV when the discount rate is zero. However, Project Q’s cash flows come in faster than those of R. Therefore, we know that at any discount rate greater than zero, R will have a higher NPV than Q. ANS: F PTS: 1 DIF: MEDIUM REF: 295 298– OBJ: (Comp: 10, 10) NPV.
Projects s and l are both normal projects with an - Course Hero
Web7 Financial models – NPV model • Net Present Value (NPV) model – Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows • + NPV: project meets minimum desired rate of return and is eligible for further consideration • - NPV: project is rejected. 8 NPV model example. 9 ... WebA company is choosing between two projects. The larger project has an initial cost of $100,000, annual cash flows of $30,000 for 5 years, and an IRR of 15.24%. The smaller … helm clear cache
Chapter 12 THE Basics OF Capital Budgeting - Studocu
Web(C) If the cost of capital increases, each project's IRR will decrease. (D) If Projects S and L have the same NPV at the current cost of capital, 10%, then Project L, the one with the … WebQ4. Which of the following statements is/are not correct concerning the discount payback period, the IRR and the NPV methods? a. a project with an Internal Rate of Return (IRR) equal to the Required Rate of Return (RRR) will have an NPV of zero. b. a project's NPV may be positive even if the IRR is less than the Required rate of return (RRR). c. WebProjects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%, while Project L’s IRR is 12%. The two projects have the same NPV when the WACC is 7%. Which of the following statements is CORRECT? Answer If the WACC is 10%, both projects will have positive NPVs. lakewood shopping center dallas restaurants