What is the increase in value of the firm as a result

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1) The cost of a project is $500,000 and the present value of the net cash inflows is $625,000. What is the increase in value of the firm as a result of accepting the project.

2) A project has an initial outlay of $100,000 initially then a cash inflow of $133,000 at third year (year 1 and year 2 has no cash inflow). At a discount rate of 10% what is the NPV?

3) You are choosing between mutually exclusive projects A and B. Project A has a NPV of $10,000 and an IRR of 15%. Project B has a NPV of $6,500 and an IRR of 23%. Which project should be selected?

4) When projecting cash flows into the future and calculating net present values(NPV), the manager should NOT adjust the cash flows for inflation. What do you think and why?

5) Is there ever a valid reason for ignoring the results of financial capital budgeting analysis? Explain.

Reference no: EM131901839

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