Capital Investments

Question 1

NPV =

Answer 1

Cfo + CF1 + CF2. …+CFn
—— ——— ——
(1+k)^1 (1+k)^2 (1+k)^n

Question 2

NPV is the CF discounted by

Answer 2

Opportunity Cost Of Capital

Question 3

IRR is

Answer 3

The discount rate NPV = 0

Question 4

IRR Calculation with Salvage value

Answer 4

Cfo
CFj
CFj
Cfj + salvage value
(F) (IRR)

Question 5

Projects with NPV > 0 and ROIC and COC (Cost of capital)

Answer 5

Provides returns greater than COC
ROIC > COC

Question 6

What does say NPV method about projects?
Mutually exclusive and independent

Answer 6

Mutually exclusive
NPV method.
Biggest NPV should be chosen

Independent
NPV method
All projects NPV > 0