Net present value method: Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method. To calculate: The net present value of the investment.

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Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

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Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

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100%

Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Expert Solution & Answer

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Answer 4

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100%

Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Expert Solution & Answer

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Answer 6

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Answer 7

Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Answer 8

Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

Answer 9

Chapter 25, Problem 25.3APE

(1)

To determine

Net present value method:

Net present value method is the method which is used to compare the initial cash outflow of investment with the present value of its cash inflows. In the net present value, the interest rate is determined by the business, based on the net income from the investment, and it is also called as the discounted cash flow method.

To calculate: The net present value of the investment.

Answer 10

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Answer 11

(2)

To determine

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Answer 12

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Answer 14

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Answer 15

Ch. 25 - Prob. 1DQ Ch. 25 - Discuss the principal limitations of the cash...Ch. 25 - Prob. 3DQ Ch. 25 - Prob. 4DQ Ch. 25 - Prob. 5DQ Ch. 25 - Prob. 6DQ Ch. 25 - Prob. 7DQ Ch. 25 - Two projects have an identical net present value...Ch. 25 - Prob. 9DQ Ch. 25 - Prob. 10DQ

Solution Summary: The author explains the net present value method, which is used to compare the initial cash outflow of investment with the current value of its cash inflows.

Concept explainers

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.

Want to see the full answer?

Chapter 25 Solutions

Solution Summary: The author explains the net present value method, which is used to compare the initial cash outflow of investment with the current value of its cash inflows.

Concept explainers

Present value index: Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund. To calculate: The present value index of the investment.

Want to see the full answer?

Chapter 25 Solutions

Present value index:

Present value index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals, and limited fund.

To calculate: The present value index of the investment.