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Use of NPV in Project Comparison Student’s name Professor’s name Course Institution Use of NPV in Project Comparison How NPV is used to compare projects Net present value (NPV) illustrates the project’s capital cost against the rates of discount. NPV is plotted on the vertical axis while the capital cost is on the horizontal axis. NPV is calculated using different capital cost values (Brealey-Myers 1992). NPV is calculated based on discounting cash flows to obtain an assumed discount rate. If the discount rate is higher there various methods used for evaluating investment which include payback period discounted payback time profitable index and modified internal return (Drake 2006). After evaluation the investment providing best returns is selected. References Bierman H. (2009). Comparing net present value and internal rate of return. Prague: Qfinance. Brealey-Myers (1992) Modern vállalati pénzügyek 1 (Modern Corporate Finance 1). Panem Kft. Budapest. Drake P. P. Capital budgeting techniques. Online (datum poslední revize: 29.6. 2006): fau. edu ppeter/fin3403/module6/capbudtech. Pdf. Juhász L. (2011). Net Present value versus internal rate of return. Economics & Sociology1) 46-53 [...]
Order Description:
Explain how a net present value (NPV) profile is used to compare projects. How does this profile compare to that of internal rate of return (IRR)? How does reinvestment affect both NPV and IRR? Provide support for your assertions.
Subject Area: Statistics
Document Type: Reports
