NPV, acceptability of the purchase of equipment. Introduction: The difference between the present value of cash inflows and the present value of cash outflows over a period of time is known as the Net Present value . NPV is used in capital budgeting as a criterion to analyse the profitability of projects.

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Chapter 10, Problem 10.9P

a)

Summary Introduction

To determine:

NPV, acceptability of the purchase of equipment.

Introduction:

The difference between the present value of cash inflows and the present value of cash outflows over a period of time is known as the Net Present value. NPV is used in capital budgeting as a criterion to analyse the profitability of projects.

b)

Summary Introduction

To determine:

The highest cost of capital that the firm can have to have a positive NPV.

Introduction:

The difference between the present value of cash inflows and the present value of cash outflows over a period of time is known as the Net Present value. NPV is used in capital budgeting as a criterion to analyse the profitability of projects.

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