Question 1

Without using formulas, provide a deﬁnition of proﬁtability index (PI).

Accepted Answer

The answer of Without using formulas, provide a deﬁnition of...

Question 2

Without using formulas, provide a deﬁnition of internal rate of return (IRR).

Accepted Answer

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Question 3

List and identify the discounted cash ﬂow (DCF) and the non-discounted cash ﬂow capital
budgeting techniques. If you were asked to evaluate a project using one of each, which techniques
would you use? Why?

Accepted Answer

The answer of List and identify the discounted cash ﬂow...

Question 4

Without using formulas, provide a deﬁnition of net present value proﬁle.

Accepted Answer

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Question 5

List and brieﬂy discuss the advantages and disadvantages of the IRR rule.

Accepted Answer

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Question 6

Both net present value and the internal rate of return incorporate the same data and utilize the
same time value of money theory in their computations. Given this, why is net present value
considered to be a superior measure when making capital budgeting decisions?

Accepted Answer

The answer of Both net present value and the internal...

Question 7

Draw a graph that illustrates two mutually exclusive investments, A and B, with a crossover rate of
return equal to 10%, and with A having the higher NPV at a discount rate of zero percent. Explain
the graph, including under which conditions project A or project B would be chosen using NPV and
then using IRR.

Accepted Answer

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Question 8

Explain the differences and similarities between NPV and PI.

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Question 9

Without using formulas, provide a deﬁnition of mutually exclusive investment decisions.

Accepted Answer

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Quiz 9: Net Present Value and Other Investment Criteria

Without using formulas, provide a deﬁnition of proﬁtability index (PI).

Without using formulas, provide a deﬁnition of internal rate of return (IRR).

List and identify the discounted cash ﬂow (DCF) and the non-discounted cash ﬂow capital budgeting techniques. If you were asked to evaluate a project using one of each, which techniques would you use? Why?

Without using formulas, provide a deﬁnition of net present value proﬁle.

List and brieﬂy discuss the advantages and disadvantages of the IRR rule.

Both net present value and the internal rate of return incorporate the same data and utilize the same time value of money theory in their computations. Given this, why is net present value considered to be a superior measure when making capital budgeting decisions?

Explain the differences and similarities between NPV and PI.

Without using formulas, provide a deﬁnition of mutually exclusive investment decisions.