The condition under which the rules of IRR ( Internal rate of return ) and NPV ( Net present value ) result in the same decision Introduction: The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

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Answer 1

Question

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

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Scenario one: Under what circumstances would it be appropriate for a firm to use different cost of capital for its different operating divisions? If the overall firm WACC was used as the hurdle rate for all divisions, would the riskier division or the more conservative divisions tend to get most of the investment projects? Why? If you were to try to estimate the appropriate cost of capital for different divisions, what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division’s cost of capital?

Scenario three: If a portfolio has a positive investment in every asset, can the expected return on a portfolio be greater than that of every asset in the portfolio? Can it be less than that of every asset in the portfolio? If you answer yes to one of both of these questions, explain and give an example for your answer(s). Please Provide a Reference

Answer 2

Question

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

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Answer 3

Question

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Expert Solution & Answer

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Answer 4

Question

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Expert Solution & Answer

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Answer 5

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Answer 6

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Answer 7

Chapter 9.5, Problem 9.5ACQ

Summary Introduction

To discuss: The condition under which the rules of IRR (Internal rate of return) and NPV (Net present value) result in the same decision

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Answer 8

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Answer 9

Summary Introduction

To discuss: The condition under which the rules of IRR and NPV conflict with each other.

Introduction:

The net present value is the difference between the market value of the investment and the cost of the investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equal to zero.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 9.1 - Prob. 9.1ACQ Ch. 9.1 - Prob. 9.1BCQ Ch. 9.2 - Prob. 9.2ACQ Ch. 9.2 - Why do we say that the payback period is, in a...Ch. 9.3 - Prob. 9.3ACQ Ch. 9.3 - What advantage(s) does the discounted payback have...Ch. 9.4 - What is an average accounting rate of return...Ch. 9.4 - What are the weaknesses of the AAR rule?Ch. 9.5 - Prob. 9.5ACQ Ch. 9.5 - Is it generally true that an advantage of the IRR...

Solution Summary: The author explains that the rules of IRR and NPV result in the same decisions or conflicts, under the above conditions.

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Chapter 9 Solutions