Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...
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- Explain what is meant by the
internal rate of return of an investment and discuss its relationship to the NPV of an investment. - Explain the problems posed for the use of the IRR when it is necessary (i) to choose between two investments and when (ii) investments are characterised by negative net cash flows at the end of their lives.
- Discuss and evaluate the use of the payback period as an investment criterion.
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