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What would happen to the NPV and PI for each project if the required rate of return increase?
If the required rate of return for a project increases, the NPV will decrease because future cash flows are being discounted at a higher rate, making them less valuable in present terms. Similarly, the profitability index (PI) would also decrease as the ratio of present value of future cash flows to initial investment would be lower due to the higher discount rate.
What are the three basic factors that influence the required rate of return for an investor?
The three basic factors that influence the required rate of return for an investor are the risk-free rate of return, the expected return from the investment, and the risk premium associated with the investment. Investors typically demand a higher rate of return for riskier investments.
Which determines whether a project should go forward?
Ultimately, the decision to move forward with a project is typically determined by factors like the project's alignment with organizational goals, available resources, potential return on investment, and risk assessment. Stakeholder buy-in and support also play a significant role in determining the feasibility and success of a project.
What do astronomers measure to estimate the distance and motion of a galaxy?
they transmit radio wave frequency to space and check for the their return or reflecting time , same as that used to calculate speed of light, for calculating the distance of galaxy. if the return radio frequency has increased, then they are moving closer to earth and vice versa. thank you
How would increase venous return affect EDV?
Increasing venous return would increase end-diastolic volume (EDV) by filling the ventricles with more blood before contraction. This increased preload would stretch the myocardium further, leading to a more forceful contraction and increasing stroke volume.
If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?
If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?
How does a change in the required rate of return affect project's Internal Rate Of Return?
A change in the required rate of return will affect a project's Internal Rate of Return (IRR) by potentially shifting the project's feasibility. If the required rate of return increases, the project's IRR needs to be higher to be considered acceptable. Conversely, a decrease in the required rate of return could make the project's IRR more attractive.
If a project with conventional cash flows has a profitability index equal to 1.0 the project you will pay back during the life of the project II will have an internal rate of return that equals the?
required return
What would happen to the NPV and PI for each project if the required rate of return increase?
If the required rate of return for a project increases, the NPV will decrease because future cash flows are being discounted at a higher rate, making them less valuable in present terms. Similarly, the profitability index (PI) would also decrease as the ratio of present value of future cash flows to initial investment would be lower due to the higher discount rate.
Relationship between required rate of return and coupon rate on the value of a bond?
required rate of return is the 'interest' that investors expect from an investment project. coupon rate is the interest that investors receive periodically as a reward from investing in a bond
What happens if the IRR is greater than the required rate of return?
The IRR rule states that if the internal rate of return (IRR) on a project or investment is greater than the minimum required rate of return - the cost of capital - then the decision would generally be to go ahead with it. Conversely, if the IRR on a project or investment is lower than the cost of capital, then the best course of action may be to reject it.
How did childbirth customs change after the Industrial Revolution?
The return to natural childbirth increased and fewer women required medication during delivery
When would you accept IRR and NPV?
You would accept a project if its Internal Rate of Return (IRR) exceeds the required rate of return or cost of capital, indicating that the project is expected to generate value. Additionally, if the Net Present Value (NPV) is positive, it suggests that the project's cash flows, discounted at the required rate, are greater than the initial investment, making it financially viable. In summary, accept the project if both IRR is above the threshold and NPV is positive.
What is minimum rate of return?
It is the lowest return on project or investment that will make the firm or investor to accept that project.
What is minimum attractive rate of return?
It is the lowest return on project or investment that will make the firm or investor to accept that project.
What required all states to return fugitive slaves to their owners?
The Fugitive Slave Act of 1850, which was a component of the Compromise of 1850, required all states, including free states, to return fugitive slaves to their owners. This law increased tensions between pro-slavery and anti-slavery groups in the United States.
Explain why a characteristic of an efficient market is that investments in that market have zero NPVs?
On average, the only return that is earned is the required return-investors buy assets with returns in excess of the required return (positive NPV), bidding up the price and thus causing the return to fall to the required return (zero NPV); investors sell assets with returns less than the required return (negative NPV), driving the price lower and thus the causing the return to rise to the required return (zero NPV).
