Estimate the incremental cash flows and choose discount rate

Assignment Help Financial Management

Reference no: EM131553308

Which of the following two statements is false?

a. To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.

b. Estimates of the cash flows and cost of capital are often subject to significant uncertainty.

c. When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.

d. Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.

e. It is possible that an IRR does not exist for an investment opportunity.

f. The internal rate of return (IRR) investment rule is based upon the notion that if the return on other alternatives is greater than the return on the investment opportunity you should undertake the investment opportunity.

g. If the payback period is less than a pre-specified length of time you accept the project.

h. It is possible that there is no discount rate that will set the NPV equal to zero.

Reference no: EM131553308

Questions Cloud

What is the indicated land value : You are asked to appriase the state's interest in the land under a new convention center. What is the indicated land value?

What is the indicated value of the land parcel : What is the indicated value of the land parcel, assuming the immediate sellout of finished lots and a relatively short construction period?

Minimum investment yield the company requires to earn : What is the minimum investment yield the company requires to earn a 4% profit?

What is the value of the site and of the building : Comparable sites are selling for $400,000. What is the value of the site and of the building?

Estimate the incremental cash flows and choose discount rate : To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.

Estimate the impact on the wacc : You are tasked with estimating the weighted average cost of capital for Lockheed Martin (ticker=LMT). Estimate the impact on the WACC.

What is the land-to-property value ratio : An appraiser is asked to value a parcel of vacant land in an older neighborhood that is almost fully developed. What is the land-to-property value ratio?

What is the indicated value of the land : A property was recently sold for $115,000. What is the indicated value of the land?

The loss ratio on line of property insurance : Suppose the loss ratio on a line of property insurance is 76 percent, the expense is 25 percent,

User Account

All Pages