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Does lower WACC equal lower NPV?
no it increases npv
Should a negative NPV project be accepted?
A negative NPV (Net Present Value) project should generally not be accepted, as it indicates that the project's expected cash flows, discounted for risk and time, do not exceed the initial investment. Accepting such a project would lead to a decrease in the firm's value and shareholder wealth. It's essential to consider alternative investments that yield a positive NPV to maximize returns. However, in certain strategic situations, a negative NPV project might be considered if it aligns with long-term goals or market positioning.
The weighted scoring approach avoid the drawbacks of the NPV approach?
The weighted scoring approach avoid the drawbacks of the NPV approach?
How do you create NPV in 2006 Suzlon Company?
Suppose i have selected Suzlon company so how can i create NPV in 2006 and how to analysis annual Report of 2006.
What are the advantages of IRR over NPV?
Elyse Douglas.
Why the NPV of a relatively long term project is more sensitive to changes in the cost of capital than is the NPV of a short term project?
due to the uncertainty
Why NPV for long-term?
Net Present Value (NPV) is crucial for long-term investment decisions because it accounts for the time value of money, allowing investors to assess the profitability of future cash flows in today's terms. By discounting future cash flows, NPV helps determine whether an investment will generate a positive return over its lifespan. A positive NPV indicates that the projected earnings exceed the costs, making it a valuable tool for evaluating long-term projects and ensuring that resources are allocated effectively. Ultimately, NPV aids in making informed financial decisions that align with an organization's strategic goals.
Does lower WACC equal lower NPV?
no it increases npv
What happens to NPV when cost of capital increased?
NPV decreases when the cost of capital is increased.
The NPV assumes cash flows are reinvested at the?
The NPV assumes cash flows are reinvested at the: A. real rate of return B. IRR C. cost of capital D. NPV
Should a negative NPV project be accepted?
A negative NPV (Net Present Value) project should generally not be accepted, as it indicates that the project's expected cash flows, discounted for risk and time, do not exceed the initial investment. Accepting such a project would lead to a decrease in the firm's value and shareholder wealth. It's essential to consider alternative investments that yield a positive NPV to maximize returns. However, in certain strategic situations, a negative NPV project might be considered if it aligns with long-term goals or market positioning.
Why is the npv of a relatively long term project more sensitive to changes in the wacc than that of a short term project?
The net present value (NPV) of a long-term project is more sensitive to changes in the weighted average cost of capital (WACC) because its cash flows are discounted over a longer time horizon. As the WACC increases, the present value of future cash flows decreases more significantly for long-term projects, which rely heavily on distant cash inflows. In contrast, short-term projects have cash flows that are realized sooner, leading to less impact from changes in the discount rate. Thus, the longer the duration of the cash flows, the greater the sensitivity of NPV to fluctuations in WACC.
Why is the NPV approach often regarded to be superior to the IRR method?
Why is the NPV approach often regarded to be superior to the IRR method?
The weighted scoring approach avoid the drawbacks of the NPV approach?
The weighted scoring approach avoid the drawbacks of the NPV approach?
Does the npv of future cash flows increase or decrease as the discount rate increases?
NPV decreases with increasing discount rates.
IRR VS NPV?
IRR: Internal rate return NPV: Net present value Both are measure of the viability of a project(s) You can have multiple IRR (because of discontinued cash flows) but you always have one NPV.
Explain why the NPV of a relatively long-term project defined as one for which a high percentage of its cash flows are expected in distant future is more sensitive to changes in the cost of capital th?
The NPV (Net Present Value) of a long-term project is more sensitive to changes in the cost of capital because a significant portion of its cash flows occurs far into the future. Since NPV calculations discount future cash flows back to their present value, even small changes in the discount rate can have a substantial impact on the present value of those distant cash flows. As a result, if the cost of capital increases, the discounted value of future cash flows decreases more dramatically, leading to greater sensitivity in NPV. Thus, the longer the time horizon of cash flows, the more pronounced the effect of changes in the cost of capital on NPV.
