New York University Rational Decision Making Discussion
Description
Class, here are some conceptual questions relating to NPV that you should be clear about –
1.Does NPV method focus on accounting profit or economic profit? Explain your answer.
2.How does IRR (Internal rate of return) differ from NPV?
3. Is break-even analysis a better method to use in investment decisions? Why or why not?
4. How to incorporate risk analysis into investment decisions? (Hint: Refer to HBR article on “Pitfalls in evaluating risky projects” in your readings this week.)
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