what is net present value in project management?

Q: What is optimal capital budget?

A: Budget: The estimation of the income and expenditure of the particular future period and is…

Q: How can we Evaluate a Single Project: For a simple investment?

A: Following are the ways in which a single project can be evaluated: Present worth: Present worth is…

Q: What is the NPV of the project?

A: Capital budgeting methods are the methods used for finding the profitability of the investment…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: How Analysis Period Differs from Project Lives?

A: Analysis period is the time period which is considered by the evaluator while assessing different…

Q: What does the equipment replacement investment decision involve?

A: Equipment replacement investment decision is an important form of capital budgeting decisions. In…

Q: What is the NPV of this project

A: The given problem is based on annuity. A series of fixed or proportionately growing payments in…

Q: Define the term Analysis Period Equals Project Lives?

A: The concept of analysis period equal to project lives is basically used in present worth analysis.

Q: How can we aggregate the risk over the project life in terms of net present value?

A: It is an incorporation of the risk level of the project over the life of the in terms of NPV by way…

Q: A project's terminal value is the ______.

A: A project's terminal value is the sum of the future values of the cash inflows compounded at the…

Q: What is the project’s MIRR?

A: Rate of return is the expected result of any investment or project. It can be negative or positive.…

Q: what is pay back analysis in project management

A: Payback period is the time a project will take to payback the money spent on it.

Q: Explain the Analysis Period Equals Project Lives?

A: The concept of analysis period equivalent to project lives is essentially utilized in current worth…

Q: What is the project's IRR?

A: Internal Rate of Return (IRR) is defined as the minimum rate of return that gives zero valuation to…

Q: How does the Analysis Period Differ from Project Lives?

A: In capital budgeting, the decisions are made to select the best alternative among various available…

Q: How can break-even analysis be helpful in evaluating project risk

A: Break even analysis helps us in determining that level of sales at which the company is at a point…

Q: What is an internal rate of return and what advantages and disadvantages are accrued by using it to…

A: IRR or Internal rate of return measures the rate of return of projected cash inflows generated by…

Q: What is the nature of research and development costs?

A:

Q: How can we consider the information for a typical investment project with a service life?

A: Computation of the interest rate can be done by considering the information available for the…

Q: What is project financing?

A: Project financing is an opportunity to finance long-term, nil, or restricted capital accessible to a…

Q: How can we determine the Incremental Analysis for Cost-Only Projects?a

A: Answer: In capital budgeting, incremental analysis is one of the most common decision making methods…

Q: How Analysis Period Equals Project Lives?

A: Answer: For the present worth analysis, the definition of analysis period equivalent to project…

Q: What is option value (of project)?

A: Option value of the project is the real option approach of evaluating projects that views selecting…

Q: Critically discuss the Expected Net Present Value method (ENPV) and explain why it may be more…

A: Expected  Net Present Value method is a method of capital budgeting. Under this method it is…

Q: How a successful engineering project affects a firm's market value?

A: Concept Market Value is value of a company in terms of its share value in the current market .It is…

Q: Why is the contribution margin an important concept forincremental decision making?

A:

Q: How do flexibility options affect projects’ NPVs and risk?

A: Fluctuations factors such as demand, interest rate levels are common which may affect future…

Q: Explain Yield Enhancement?

A: A "yield enhancement technique" is an investment approach that includes purchasing options at the…

Q: Can we consider Project Risk by Discount Rate?

A: The discount rate is an interest rate that is used in computing the present value of the future cash…

Q: Explain Initial Project Screening Methods?

A: Following are the Initial Project Screening Methods: The payback period alludes to what extent it…

Q: What are the methods of describing Project Risk?

A: The project risk is an unpredictable occurrence or situation that has an effect on at least one…

Q: What is an example of project plan proposal?

A: It is an attempt to implement desired change to an environment in a controlled way. By using…

Q: How can we consider the Future Worth and Project Balance?

A: The question is based on the concept of evaluation of long term investment, future worth and project…

Q: ision based on the IRR? How would the NPV of the same project look?

A: Note : As per the guidelines, only first question will be answered.

Q: maximization goal?

A: According to standard theory of the firm, profit maximization is taken into account to be the…

Q: Discuss the use of sensitivity analysis as a way of evaluating project risk.

A: Sensitivity analysis Sensitivity analysis is said to be an evaluation tool that makes an assessment…

Q: How do we calculate the PWfor the projects?

A: Present Worth (PW) or Net Present Worth (NPW) is based on the time value of money concept. It is…

Q: If a firm can structure a project such that expenditures can be madein stages rather than all at the…

A: When expenditure of any project are made in different stages rather than at the beginning then the…

Q: hich project should the company pursue? Why?

A: NPV = Present value of cashinflows - Present value of cash outlay.

Q: Illustrate the main factors of Project Risk?

A: The project risk is defined as the uncertain event or condition that occurs mainly on positive or…

Q: What is a true indicator of the project's profitability?

A: Answer: Capital budgeting is the whole project investment process and the decision of whether it…

Q: List the factors of time and uncertainty of investment project?

A: Investment projects are a complex environment and there are many risks involved. one of those group…

Q: Which project should be selected based on incremental IRR?

A: IRR stands for internal rate of return refers to the percentage of return on capital invested by the…

Q: How can we Consider Project Risk by Discount Rate?

A: In corporate finance, a discount rate is the rate of return used to discount future cash flows back…

Q: Explain Financing Project Development?

A: Introduction  Project finance refers to the funding of long-term projects, such as public…

Q: Explain Incremental Analysis for Cost-Only Projects?

A: The question is based on the concept of incremental analysis used in capital budgeting.

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.