Solution-What is indicated by a net present value of

What is indicated by a net present value of exactly zero

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Q1. A company has budgeted Php 1,000,000 for capital investment during the upcoming year. There are seven proposals seem to be congruent with the mission, objectives, and goals of the organization. In analyzing these proposals, management is interested in wealth maximization and is assuming a 12% cost of capital. Which projects would you choose and why?

Project	Initial Investment	NPV	IRR
A	550,000	200,000	14%
B	600,000	125,000	13%
C	200,000	175,000	14%
D	300,000	180,000	12.5%
E	250,000	200,000	13%
F	400,000	-100,000	10%
G	700,000	300,000	14.5%

Q2. Explain the following statement:" Analysts look at both balance sheet and income statement ratios when appraising a firm's financial condition."

Q3. If the net present value is a positive amount, the investment exceeds the required rate of return. If the net present value is a negative amount the return on the proposed investment is less than the required rate of return. What is indicated by a net present value of exactly zero? Will the proposed project of zero net present value be accepted? Explain your answer.

Reference no: EM133105032

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What is indicated by a net present value of exactly zero

Reference no: EM133105032

Reference no: EM133105032

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