Reference no: EM132591187
Question 1: Why might a firm choose to accept a long-term investment even if the net present value is below zero?
Question 2: What might cause a manager to reject a long-term investment even though the net present value is positive?
Question 3: Describe the two steps required to calculate net present value and internal rate of return when using Excel.
Question 4: What is the payback method, and why do managers use this method?
Question 5: What are the two weaknesses associated with the payback method?
Question 6: Refer to What method of evaluating long-term investments is most popular? Why do you think the payback method is the least-used method?
Question 7: What does the term working capital refer to, and how does working capital affect the evaluation of long-term investments?
Question 8: Assume a company pays income taxes. How are revenue and expense cash flows adjusted for income taxes when calculating the net present value?
Question 9: Assume a company pays income taxes. How does depreciation expense affect cash flows even though it is a noncash expense?