What happens if two projects have the same positive net present value?
If both projects have a positive NPV, compare the NPV figures. Whichever project has the higher NPV is the more profitable and should be your first priority. Doing both projects is fine, since both will be profitable, but if you can do only one then go with the higher-NPV project.
What discount rate would result in the same NPV for both projects?
What discount rate would result in the same NPV for both projects? B is correct. For these projects, a discount rate of 13.16 percent would yield the same NPV for both (an NPV of 6.73).
Can NPV be used to compare projects?
NPV accounts for the time value of money and can be used to compare similar investment alternatives. 1 The NPV relies on a discount rate that may be derived from the cost of the capital required to invest, and any project or investment with a negative NPV should be avoided.
How do you calculate the net present value of two projects?
What is the formula for net present value?
- NPV = Cash flow / (1 + i)t – initial investment.
- NPV = Today’s value of the expected cash flows − Today’s value of invested cash.
- ROI = (Total benefits – total costs) / total costs.
Can 2 projects have same NPV but different IRR?
Since we can accept all independent projects if they add value, NPV and IRR conflict does not arise. The company can accept all projects with positive NPV. However, in case of mutually-exclusive projects, an NPV and IRR conflict may arise in which one project has a higher NPV but the other has higher IRR.
When a project has a negative NPV?
If the calculated NPV of a project is negative (< 0), the project is expected to result in a net loss for the company. As a result, and according to the rule, the company should not pursue the project.
When calculating NPV The present value of the nth?
One of the flaws of the payback period method is that cash flows after the cutoff date are ___. T/F: When calculating NPV, the present value of the nth cash flow is found by dividing the nth cash flow by 1 plus the discount rate raised to the nth power.
How do you compare two projects?
3 Answers. EASY WAY TO FIND PATH : ( considering both projects are open in Android Studio) Switch to project you want to compare > right click file/directory/project/module > copy path > paste it back in select path dialog. BETTER to copy path first. I’m highly recommend Compare Directories Plugin for Android Studio 2+ …
When evaluating two projects that require different outlays the IRR does not recognize the difference in the size of the investments?
When evaluating two projects that require different outlays, the IRR does not recognize the difference in the size of the investments. What is true of an independent project? cash flows are unrelated. both selecting one would automatically eliminate accepting the other and the projects perform the same function.