Net present value is generally considered to be best method

Assignment Help Financial Management

Reference no: EM13804341

Given that the net present value (NPV) is generally considered to be the best method of analysis, why could you still use the other methods?

You need to use other methods because the net present value method is unreliable when a project has unconventional cash flows.

You need to use the other methods since conventional practice dictates that you only accept projects after you have generated three accept indicators.

The other methods provide results that are generally easier to understand than a net present value analysis.

The average accounting return must always indicate acceptance since this is the best method from a financial perspective.

The discounted payback method must always be computed to determine if a project returns a positive cash flow since NPV does not measure this aspect of a project

Reference no: EM13804341

Questions Cloud

What is the net cash flow from operating activities : What is the net cash flow from operating activities? What is the net cash flow from investing activities? What is the net cash flow from financing activities? What is the change in cash?

Three key figures on the cash flow statement : Which of the three key figures on the Cash Flow Statement is the most important for assessing the financial health of the business?

Compute amount of cash paid to merchandise suppliers fiscal : Lowes companies, a retailer of home improvement products, reported cost of goods sold of $31,729 million for the fiscal year ended January 30, 2009. Its ported merchandise inventories of $7,611 million at the beginning of fiscal 2009 and 8,209 millio..

Drawback of switching from a partnership to the corporate : One drawback of switching from a partnership to the corporate form of organization is the following:

Net present value is generally considered to be best method : Given that the net present value (NPV) is generally considered to be the best method of analysis, why could you still use the other methods? You need to use other methods because the net present value method is unreliable when a project has unconvent..

Selling corporation had earnings before interest and taxes : Last year the selling corporation had earnings before interest and taxes (operating income) equal to $1 million. it paid $200,000 in dividends to its stockholders and $100,000 in interest to its creditors. During the year, the company also repaid a b..

Forecast the percentage of administrative expenses : The Seneca Children’s Fund (SCF) is a local charity that runs a summer camp for disadvantaged children. The fund’s board of directors has been working very hard over recent years to decrease the amount of overhead expenses, a major factor in how char..

Compute three-week weighted moving average for time series : Using a weight of 1/2 for the most recent observation, 1/3 for the second most recent, and 1/6 for third most recent, compute a three-week weighted moving average for the time series. Compute the MSE for the weighted moving average in part (a). Do yo..

Describe cyclical variations and seasonal variations : We’ve already discussed seasonal variations and how they result from the predictable shopping habits of consumers. Describe cyclical variations. How do they compare to seasonal variations?

User Account

All Pages