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D076 Module 11 test(18 questions and answers)
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D076 Module 11 test(18 questions and answers)
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D076 Module 11test(18 questions and
answers)
Why is it important to consider all relevant cash
flows in an ideal evaluation method for capital
investment? - answer Without considering every
cash flow of a potential project, you do not know
how the project will enhance the value of a firm.
Talia is comparing four mutually exclusive projects.
In order to choose the best project to optimize the
goal of the firm, which capital budgeting method
should Talia use? - answer Net present value (NPV)
Alphabet Co. has $50,000 to spend on capital
investment projects for the next year. It will do as
many projects as it has cash for. Alphabet Co.
calculates the potential incremental cash flows and
costs of the projects as well as the NPV, IRR, and PI
for each project. How should the company decide
which projects to invest in if it wants to maximize
the total amount of value created? - answer It
should choose the projects with the highest PIs
until all capital has been used
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