Net Present Value : Net present value refers the variance between the present value of cash flows and the present value of cash outflows . NPV decision rule: decision rule signifies the decision related to investment in the project. The value of is greater than 0 then the project should be considered for the acceptance, otherwise, the project is rejected. Internal Rate of return : Internal rate of return is that rate at which the present value of cash inflows is similar to the present value of cash outflows and resulted net present value became zero. Rule: rule signifies that project should be considered for acceptance if the is greater than the cost of capital else the project is rejected. To Explain: The conditions in which the rule and rule give the same accept or reject decision.

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Chapter 8, Problem 5CT

Summary Introduction

Net Present Value: Net present value refers the variance between the present value of cash flows and the present value of cash outflows.

NPV decision rule: decision rule signifies the decision related to investment in the project.

The value of is greater than 0 then the project should be considered for the acceptance, otherwise, the project is rejected.

Internal Rate of return: Internal rate of return is that rate at which the present value of cash inflows is similar to the present value of cash outflows and resulted net present value became zero.

Rule: rule signifies that project should be considered for acceptance if the is greater than the cost of capital else the project is rejected.

To Explain: The conditions in which the rule and rule give the same accept or reject decision.

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