Net Present Value (Author’s name) (Institutional Affiliation) TOPIC 1 Introduction To measure capital investment appraisal of a business proposal or project among many other methods used Net Present Value is one of the essential techniques. Net Present Value (NPV) is used to approximate either deficit or surplus cash in-flow to come up with perfect finance commitments; the paper will explain its use advantages and disadvantages on the capital investment. (PV) In the Net Present Value is the indicated present value of the cash flows present as the inflows considered as positive cash flows and the negative cash flow being outflows. The Net Present Value used as a method for revenue deducting the cost. Profit in the income is bigger than the expenses elaborates that the NPV is positive. Advantages of Net Present Value This method evaluates on investment to show if it can benefit the company with an increase highest amount of investment at $500 000. The investment would therefore be 42% of the $1.2 million budget and 50% of the 1 million budget. References Goldenberg Jacob et al. "The NPV of bad news." International Journal of Research in Marketing 24.3 (2007): 186-200. Kurzban R. Duckworth A. Kable J. W. & Myers J. (2013). An opportunity cost model of subjective effort and task performance. Behavioral and Brain Sciences 36(06) 661-679. Osborne Michael J. "A resolution to the NPV–IRR debate?." The Quarterly Review of Economics and Finance 50.2 (2010): 234-239. Petković D. Shamshirband S. Kamsin A. Lee M. Anicic O. & Nikolić V. (2016). Survey of the most influential parameters on the wind farm net present value (NPV) by adaptive neuro-fuzzy approach. Renewable and Sustainable Energy Reviews 57 1270-1278. Ye Sudong and Robert LK Tiong. "NPV-at-risk method in infrastructure project investment evaluation." Journal of construction engineering and management 126.3 (2000): 227-233. [...]
2 separate 1.5 page papers one sources each minimum topics below. Topic one: Capital Investment Evaluation Select one of the capital investment evaluation methods described in Chapter 10 of your text. Fully explain the capital evaluation method’s strengths and weaknesses. Take a position and defend the use of your selected method. Be sure to use at least two scholarly sources to support your position. topic two: Ranking Investment Alternatives Grosvenor Industries has designated $1.2 million for capital investment expenditures during the upcoming year. Its cost of capital is 14 percent. Any unused funds will earn the cost of capital rate. The following investment opportunities along with their required investment and estimated net present values have been identified: Project Net Investment NPV Project Net Investment NPV A $200,000 $22,000 F $250,000.00 $30,000.00 B $275,000 $21,000 G $100,000.00 $7,000.00 C $150,000 $6,000 H $200,000.00 $18,000.00 D $190,000 -$19,000 I $210,000.00 $4,000.00 E $500,000 $40,000 J $250,000.00 $35,000.00 In your response, complete the following: Rank the projects using the profitability index. Considering the limit on funds available, which projects should be accepted? Using the NPV, which projects should be accepted, considering the limit on funds available? If the available investment funds are reduced to only $1,000,000: Does the list of accepted projects change from Part 2? What is the opportunity cost of the eliminated $200,000?