Homework answers / question archive / 1)  In a net present value analysis, how can an analyst explicitly and formally consider the influence of risk on the present value of certain cash flows?   2)   What factors influence the present value of the depreciation tax benefit?   3

1)  In a net present value analysis, how can an analyst explicitly and formally consider the influence of risk on the present value of certain cash flows?   2)   What factors influence the present value of the depreciation tax benefit?   3

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1)  In a net present value analysis, how can an analyst explicitly and formally consider the influence of risk on the present value of certain cash flows?

  2)   What factors influence the present value of the depreciation tax benefit?

  3.   Why is it important for managers to be able to rank projects?

  4.   If it is assumed that managers act to maximize the value of the firm, what can also be assumed about the existing mix of capital components relative to the set of all viable alternative mixes of capital components?

  5.   Does a project that generates a positive internal rate of return also have a positive net present value? Explain.

  6.   Why is the profitability index a better basis than net present value to compare projects that require different levels of investment?

  7.   What is the major advantage of the accounting rate of return relative to the other techniques that can be used to evaluate capital projects?

  8.   Why is it important for organizations to conduct post investment audits of capital projects?

  9.   How are capital budgeting models affected by potential investments in automated equipment investment decisions?