In the context of the net present value (NPV) model discuss:

o The conditions that must be observed such that a project that has a positive NPV should be chosen. Why, in these circumstances, would a project that has a positive NPV be chosen?

o Why depreciation does not involve a flow of cash and therefore can be ignored.

o Within the standard present-value model, why tax savings on interest payments are excluded from the cash-flow estimation.

o The effect of sunk costs within the analysis of a projects viability.