RU Discounted Cash Flow Using Figures of Merit Discussion
Description
- What makes a Net Present Value acceptable and why do we use it in project evaluation?
- What does the Benefit Cost Ratio tell you about a project and how would you explain a BCR of 1.76 as a profitability index?
- What is the discount rate and how does it change with an investment’s risk?
- Why might a project team have to revise the assumptions it makes in a cost/benefit analysis? (Hint: Think how assumptions may change — risks, competition, new technology, etc.)
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