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Looking for answers to the following 10 questions What is the main purpose for a firm adapting capital budgeting decision methods? What question does the
Looking for answers to the following 10 questions
- What is the main purpose for a firm adapting capital budgeting decision methods?
- What question does the payback technique answer? Describe in words how to compute a payback measure.
- Name 3 flaws inherent in the payback measure.
- Despite your answer to question 3, payback remains a highly used method in practice. Why do you think the payback method is popular?
- What question does the net present value method answer? Describe in words how to compute a net present value measure.
- Compare the NPV technique to the payback technique as a capital investment decision measure.
- What question does the internal rate of return method answer? Describe in words how to find an internal rate of return.
- Compare the IRR to payback and NPV as a capital decision measure.
- Identify two potential causes of conflicts between NPV and IRR when ranking mutually exclusive investment projects.
- Investigate and report which, if any, of these measures your firm is utilizing in making capital investment decisions.
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