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Explain why the npv of a relatively short-term project

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a) Assume that you are the manager of a company that is in financial distress with $5 million in debt outstanding that will mature in a few months. Your company currently has $4.5 million cash on hand. Assuming that you are operating the company in the shareholders' best interests and that debt covenants prevent you from simply paying out the cash to shareholders as cash dividends, what actions should you take?

b) Explain why the NPV of a relatively short-term project, with a high percentage of its cash flows expected in the near future, is less sensitive to changes in the cost of capital than the NPV of a long-term project.

Reference no: EM132785574

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