Question
Describe the investment decision rules for each of the capital budgeting tools for both stand-alone and mutually exclusive projects Describe situations in which profitability index
Describe the investment decision rules for each of the capital budgeting tools for both stand-alone and mutually exclusive projects
Describe situations in which profitability index cannot be used to make an investment decision
Discuss the reasons IRR can give a flawed decision If the IRR rule and the NPV rule lead to different decisions for a stand-alone project, which should you follow? Why?
For mutually exclusive projects, explain why picking one project over another because it has a larger IRR can lead to mistakes.
Explain why ranking projects according to their NPV might not be optimal when you evaluate projects with different resource requirements.
How can the profitability index be used to identify attractive projects when there are resource constraints?
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