On a project that does not have a positive net present value (NPV). Introduction: Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Question

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Answer 1

Question

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

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Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,100. Each project will last for 3 years and produce the following net annual cash flows. Year 1 (a) 2 3 AA AA BB CC 9,450 Total $29,400 $31,500 BB $7,350 $10,500 $13,650 12,600 (b) 10,500 10,500 The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view the factor table. CC Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) Which is the most desirable project? 12,600 Which is the least desirable project? 11,550 $37,800 years years The most desirable project based on payback period is years The least desirable project based on payback period is Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or…

Answer 2

Question

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

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Answer 3

Question

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

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Answer 4

Question

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

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Answer 5

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

Answer 6

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

Answer 7

Chapter 11, Problem 11.1CTF

Summary Introduction

To discuss: On a project that does not have a positive net present value (NPV).

Introduction:

Net present value (NPV) refers to the current discounted value of the future cash flows. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has higher net present value.

Answer 8

Expert Solution & Answer

Answer to Problem 11.1CTF

The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means, the NPV is positive when the value of revenue is higher than the cash outflows. On the other hand, the NPV is negative when the value of revenue is lesser than the cash outflows gained by the project.

Answer 12

Conclusion

A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not point out a positive NPV, that particular project has to be rejected by the company.

Answer 13

Ch. 11.1 - Prob. 11.1ACQ Ch. 11.1 - What are some potential sources of value in a new...Ch. 11.2 - Prob. 11.2ACQ Ch. 11.2 - What are the drawbacks to the various types of...Ch. 11.3 - How are fixed costs similar to sunk costs?Ch. 11.3 - What is net income at the accounting break-even...Ch. 11.3 - Why might a financial manager be interested in the...Ch. 11.4 - If a project breaks even on an accounting basis,...Ch. 11.4 - If a project breaks even on a cash basis, what is...Ch. 11.4 - Prob. 11.4CCQ

Answer to Problem 11.1CTF

Explanation of Solution

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Chapter 11 Solutions