Explain why NPV is generally preferred over IRR when choosing among competing or mutually exclusive projects. Why would managers continue to use IRR to choose among mutually exclusive projects?

Q: Which of the following R&D costs can be capitalized by an SME? Group of answer choices Conceptual…

A: Research and development cost refers to the cost incurred by the SME for the development of new…

Q: Why do you think CFOs tend to look at strategic concerns before they look at the NPV of a project?…

A: Net present value (NPV) is used by analysts and investors to evaluate the profitability of a project…

Q: Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure.…

A: From the given graph of NPV vs required rate, we can see that at the required rate of 8% both A and…

Q: True or False If several independent projects are considered, the one(s) with the highest PIs…

A: If several independent projects are considered, the one(s) with the highest PIs should be chosen...…

Q: What is a mutually exclusive project? How should managers rank mutually exclusive projects?

A: Concept of mutual exclusive projects: Mutually exclusive projects are those projects which cannot be…

Q: two mutually exclusive projects were being compared, would a high cost of capital favor the…

A: Step -2 in the answer

Q: What is the NPV decision rule for discretionary mutually exclusive projects? A. Accept the project…

A: There are two types of projects: Independent projects. Mutually exclusive projects. Independent…

Q: Stakeholder involvement is very crucial in the EIA. Then What challenges will the project face if…

A: EIA (Environmental Impact Assessment) is referred as the process or procedure for evaluation of an…

Q: Describe the incremental Analysis for Comparing Mutually Exclusive Alternatives?

A: The question is based on the concept of Incremental cash flow analysis of mutually exclusive…

Q: When evaluating projects by the present worth method, how do you know which one(s) to select if the…

A:

Q: Should companies completely avoid high-risk projects? Explain.

A: A huge-risk venture is one that has either a tall rate possibility of capital misfortune or…

Q: what does it mean if the npv and irr are both negative quora, should the company invest in the…

A: Capital Budgeting entails long-term planning and monitoring of capital expenditures, as well as a…

Q: How will you choose between two mutually exclusive projects which do differs in terms of their…

A: An investment appraisal is a capital budgeting technique that helps to analyze a proposed project's…

Q: minimize overall risk

A: A manager has to make different decisions related to choosing a project.  A project giving a higher…

Q: what does it mean if the NPV and IRR are both positive, should the company invest on the project or…

A: Net Present value refers to the present value of future cash flow, which means cash flows generated…

Q: f the projects are mutually exclusive, highest payback period project will accept normally. a. True…

A: Payback period is the time it takes to recover the cost of an investment

Q: Evaluating the mutually exclusive projects using the IRR and NPV approaches can be problematic'.…

A: It is a method under capital budgeting which includes the computation of the net present value of…

Q: What is crossover rate and why is it important when evaluating two projects?

A: The process through which a company evaluates possible big projects or investments is called capital…

Q: How would you describe the competitive landscape and fragmentation levels?   I understand the…

A: The competitive landscape for online advertising is highly fragmented, with a large number of…

Q: Is it possible for conflicts to exist between the NPV and the IRR when independent projects are…

A: Meaning of NPV= Net present Value NPV is used to analyse the decisions of investments in any project…

Q: According to the Discounted Payback method, which project should be selected? What is the chief…

A: According to the given information, Project D is said to have lesser discounted payback period…

Q: Provide an example of a “good” externality—that is, one thatincreases a project’s true NPV over what…

A: The net present value (NPV) method is a method to ascertain the profitability of an investment in a…

Q: Explain the difference between independent and mutually exclusive projects?with examples..

A: Independent Project Independent project means the execution of the project with its cash flow will…

Q: What is the difference between “independent” and “mutuallyexclusive” projects?

A: Projects are categorized in capital budgeting as independent or as mutually exclusive. If a…

Q: Describe the procedure used for Incremental Analysis for Comparing Mutually Exclusive Alternatives?

A: Mutually exclusive alternatives are those alternatives in which only one alternative can be selected…

Q: Which of the following is not a criterion that is used to determine whether a project is acceptable…

A: A project is accepted when NPV is greater than or equal to zero. If NPV is Negative then the project…

Q: How should firms evaluate projects with different risks?

A: Project evaluation is carried out by organization to know if a particular project is suitable for…

Q: How can we generalize the decision rule for comparing mutually exclusive projects?

A: A company can only select only one project from various projects because it requires huge capital…

Q: he company has an option of investing in Project A or Project B. If Project A is accepted, Project B…

A: Mutually exclusive projects are those projects, if one is selected then other cannot be selected or…

Q: What two conditions can lead to conflicts between the NPV and the IRR when evaluatingmutually…

A: NPV : NPV or net present value is defined as the difference between present value of cash inflows…

Q: Question A  Explain why firms choose to decentralize and give an example.

A: Answer A: Some firms prefer to decentralize to maximize overall productivity. Lower-level management…

Q: A situation in which taking one investment prevents the taking of another is(are) called: O Net…

A: In capital budgeting decisions, there are three types investment decision of projects (a) dependent…

Q: hat are some of the difficulties that might occur with the application of an IRR approach in project…

A: Internal rate of return at which present value of cash flow is initial investment of the project and…

Q: Explain the difference between independent and mutually exclusive projects?

A: Under capital budgeting, there are 2 types of projects selection basis: 1. When projects are…

Q: Financially, what is the economic worth of outbidding thecompetitors for a project?

A: Companies often exploit opportunities in the market because they will create positive NPV for the…

Q: In mutually exclusive projects, a firm will evaluate all alternatives and select the best project…

A: The mutually exclusive projects are those selection of one project excludes the selection of another…

Q: How are the generation and evaluation of creative investment proposals far too important task?

A: Investment appraisal or evaluation is the two-fold task of balancing risk pertain to a definite…

Q: There are times when accepting a negative or zero NPV project makes sense. Explain what a zero NPV…

A: Net present value means the difference between present value of cash inflow and present value of…

Q: What two characteristics can lead to conflicts between the NPV andthe IRR when evaluating mutually…

A: 1.When two projects are of different size and investment, NPV and IRR can throw up different…

Q: Explain the importance of the excess-capacity issue in setting a competitive bid price.

A:

Q: Why do we need to use the incremental analysis when comparing mutually exclusive projects?

A: Mutually exclusive projects are the projects which compete with each other. In a company which has…

Q: Explain why the IRR may contradict the ranking of NPV and therfore not recmmeneded to use when…

A: For single and Individual projects with conventional cash flows, there is no conflicts or…

Q: When identifying the investment alternatives: Solve, a. Identify mutually exclusive alternatives b.…

A: Investment Alternatives refer to investments in avenues other than cash, deposits, stocks, and…

Q: How do you overcome the challenges posed by unequal lives of the projects being comparedand when…

A: Capital Budgeting is the evaluating techniques which evaluates the profitability of the long term…

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.