The project NPV. Present Value : It refers to the value of an amount today after considering the time value of money and the discounted rate. In other words it is discounted value of the amount to be received in future. Capital Budgeting: The decision-related to the investment for long run is called capital budgeting. Capital budgeting includes the investment in the heavy machinery and information technology. Net Present Value (NPV): The net present value is a differential amount of the net cash inflow from future investments and net cash outflow in the form of cost that the company has to pay at present as initial cost of the investment.

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Chapter 7, Problem 28QP

a.

Summary Introduction

To identify: The project NPV.

Present Value:

It refers to the value of an amount today after considering the time value of money and the discounted rate. In other words it is discounted value of the amount to be received in future.

Capital Budgeting:

The decision-related to the investment for long run is called capital budgeting. Capital budgeting includes the investment in the heavy machinery and information technology.

Net Present Value (NPV):

The net present value is a differential amount of the net cash inflow from future investments and net cash outflow in the form of cost that the company has to pay at present as initial cost of the investment.

b.

Summary Introduction

To identify: The NPV assuming abandonment after year one, two and three.

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