b. Which project should management accept? Assuming the discount rate of 5%, NPV (A) = $41 and NPV (B) = $20. Projects with positive NPV increase a company's value. Typically, the rule is described as being "Projects with negative NPV should be rejected but projects with positive NPV may be approved". Project A Project B PV of net cash flows $70,000 $130, Initial investment 50,000 100, Project A has a PI ratio of 1 ($70,000/$50,000), while Project B yields a PI ratio of 1. Sponsored by YouTrack Finance 3000 SmartBook Chapter 13 Flashcards - Quizlet Results. Select all that apply. NPV vs IRR - Overview, Similarities and Differences, Conflicts Net Present Value Rule: The net present value rule, a logical outgrowth of net present value theory, refers to the idea that company managers or investors should only invest in projects or engage . The company should evaluate it by calculating the net present value of cash flows. why managers would accept negative npv projects The shareholders' wealth will be decreased by the project. - Response to government regulations: In some countries and under certain circumstances, the government might force some companies to undertake projects with a negative NPV (usually the price of not undertaking these projects is sever business disruption). why managers would accept negative npv projects Making Your Business Decisions With Finance Methods and Models The NPV rule dictates that investments should be accepted when the present value of the entire projected positive and negative cash flows sum to a positive number. The NPV rule dictates that investments should be accepted when the present value of all the projected positive and negative free cash flows sum to a positive number. The criterion for acceptance or rejection is just a benchmark decided by the firm, say 3 Years. Simply put, a cash flow is a point in time when cash is flowing. Using the PI approach to . better products, lower production costs, etc. 1.2.6.4, p. 34). Why managers would accept negative NPV projects? From the economy and accounting picture, the project should be terminated due to a negative NPV value. e. The project will make profits only when the payback period is reached. For example, Facebook bought

In Che Anno è Nata Asia Busciantella, Articles W