How is the project profitability index computed

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1. How is the IRR used to determine whether a project is acceptable or not?

2. What are least-cost decisions? How are they evaluated?

3. "As the discount rate decreases, the present value of a given future cash flow also decreases." Do you agree? Explain.

4. How is the project profitability index computed, and what does it measure?

5. What is meant by the term payback period? How is the payback period determined? How can the payback method be useful?

6. How is the eventual salvage value of new equipment being purchased as part of a capital project treated when calculating the simple rate of return?

Reference no: EM13952788

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