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Capital budgeting decision criteria Capital Budgeting Decision Criteria: NPV the NP, the more value the project adds; and added the net present value (NP) method
Capital budgeting decision criteria
Capital Budgeting Decision Criteria: NPV the NP, the more value the project adds; and added the net present value (NP) method estimates how much a potentisl preject vell contritute to Sect value means a Seet-stock price. In equation form, the NPV is defired as , and it is the best selection criterion, The Select Nrv.cr, +?????.? Crt is the expected cash now in Period t, r is the project's risk-adjusted cost of capital, and cash outflows are treated as negative cash flows. The NPV calculation assumes that cash infows can be reinvested at the preject's risk the proiect with tho : seed t] NP. Quantitative Problem: Belinger Ind stres cosi r g two projects for inclusion ? captal budget, and you have been asked to do-analy Both prees aftertax aan ne ae ton on the pre below Seed 1. When the firm is considering independent projects, i the projects NPV exceeds rero the firm shouldSeect the project. When the firm is considering mutually excusive projects, the firm should accept Depreciation, salvage vaiues, net operating working capital requirements, and tax ffects are all included in these cash flews. Both projects have 4-year lives, and they have risk characteristics simliar to the fem's average 690 Project 8 -920290265440 0 What is Preject A's NPV? Round your anwer to enat is ?.wv? Round yourdinr to t_ rearese cere. Do not round your neemned earest cert your intermed ate Calolations caciabons. If the projects were independent, which prajectis) would be accepted? r the prajects were mubualy exclusive, which projectta) would be accepted Step by Step Solution
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