Cause change in the irr ranking of two such projects

Assignment Help Financial Management

Reference no: EM132014520

When two mutually exclusive projects are being compared, explain why the short-term project might be ranked higher under the NPV criterion if the cost of capital is high whereas the long-term project might be deemed better if the cost of capital is low. Would changes in the cost of capital ever cause a change in the IRR ranking of two such projects? Why or why not?

Reference no: EM132014520

Questions Cloud

What yield will this investor realize : Assume that an investor pays $920 for a long-term bond that carries a coupon of 11%. what yield will this investor realize?

The risk-adjusted cost of capital for particular division : What procedures are used to determine the risk-adjusted cost of capital for a particular division? What approaches are used to measure a division’s beta?

Some type of replacement chain analysis : Would the failure to employ some type of replacement chain analysis bias an NPV analysis against one of the projects? Explain.

Concept of the covered interest rate parity imply in case : What current spot exchange rate would the concept of the covered interest rate parity imply in this case?

Cause change in the irr ranking of two such projects : Would changes in the cost of capital ever cause a change in the IRR ranking of two such projects? Why or why not?

Expensive car for your new delivery service : You are trying to pick the least-expensive car for your new delivery service.

Company produce to maximize their weekly profit : How many plates in each category should the company produce to maximize their weekly profit?

The discount rate when analyzing the acquisition of firm : Which of these rates is most appropriate to use as the discount rate when analyzing the acquisition of Firm B by Firm A?

What is the new required return on equity : KarTeX Inc, was recently founded to manufacture a new efficient fuel injection system. What is the new required return on equity?

User Account

All Pages