Home / Questions / The net present value (NPV) rule is considered one of the most common and preferred criter
The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $600, 000. The project is expected to generate the following net cash flows: Celestial Crane Cosmetics's weighted average cost of capital is 9%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? $1, 148, 888 $823, 888 $1, 273, 888 $223, 888 Making the accept or reject decision Celestial Crane Cosmetics's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NPV method, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of $0? When a project has an NPV of $0, the project is earning a rate of return less than the project's weighted average cost of capital. It's OK to accept the project, as long as the project's profit is positive. When a project has an NPV of $0, the project is earning a rate of return equal to the project's weighted average cost of capital. It's OK to accept a project with an NPV of $0, because the project is earning the required minimum rate of return. When a project has an NPV of $0, the project is earning a profit of $0. A firm should reject any project with an NPV of $0, because the project is not profitable.
Dec 02 2019 View more View Less
A Bank teller at a savings and loan drive-through accepted a cash payment from customer #1 for an auto loan. The teller appeared to process the payment, but told the cust...
Jul 20 2021Draw a Lewis structure for each of the following molecules or ions. Describe the electron-pair geometry and molecular geometry around the central atom.(a) NH2Cl(b) Cl2O (...
Jul 20 20211. Where can an economy not produce?a. Inside its production possibilities frontierb. On its production possibilities frontier.c. Outside its production possibilities fro...
Apr 28 2021Which of the following would cause stagflation?A. Aggregate demand shifts right.B. Aggregate demand shifts left.C. Aggregate supply shifts right.D. Aggregate supply shifts left.
May 10 2021What does asset securitization involve? B- In financial economics what do we mean by stochastic dominance, how can we apply it in decision making, give one example.
Apr 15 2021A job was timed for 60 cycles and had an average of 1.29 minutes per piece. The performance rating was 90 percent, and workday allowances are 13 percent. Determine each o...
Aug 27 2020How many non-bonding electrons are there in an N2 molecule?
Jul 22 2021Let X be a geometric random variable with parameter p, and n and m be nonnegative integers. (a) For what values of n is P (X = n) maximum?(b) What is the probability t...
Aug 03 2020How do I prepare post closing balance sheets for each of these funds?
Sep 01 2020Prohibited bargaining issues, such as the issue of the closed shop, an arrangement whereby union membership is a prerequisite, are statutorily outlawed.32) A mandatory ba...
Dec 11 2019