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mixer [17]
3 years ago
12

Identify the simplifying assumptions usually made in net present value analysis.

Business
1 answer:
Jet001 [13]3 years ago
6 0

Answer:

All cash flows other than the initial investment occur at the end of periods.

All cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate.

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.

NPV is a capital budgeting method

Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.  

When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable

For example, a project costs 100. the cash flow in year 1 and 2 is $500 each. the discount rate is 10%

the NPV can be calculated using the financial calculator

NPV = $767.77

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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Mineral's right is a profit.

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How to write business proposal
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Let’s say you get a request out of the blue to provide “some information”. What do you do? What you don’t do is just send some information as requested.

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You pick up the telephone, call the person, and ideally arrange a meeting to ask more questions. Questions such as:

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• what are the issues you are currently facing?

• what have you tried before?

• what has led you to thinking this might be your solution?

• what are your constraints?

• what is your timeframe?

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Step 2 - Plan

Look for areas where you can add value. Can you position a better product, a better way or a better price construct to give an outcome superior to the one they are thinking of? Aim to be as helpful as possible. Even if you just give advice and don’t win the work, they’ll think of you again.

If possible, give your prospect two or three options that fall within different budgets. You never know what funding they may have available to them, and you’re leaving money on the table if you give them one choice to either accept or reject. When provided with a good, better, best structure, most people tend to fall in the middle.

Step 3: - Socialise

Then it is a good idea to socialise your proposed solution with the person. Get their input, buy-in and feedback on the various options and let them select the one that works best for them.

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Lastly, put the information into writing, in a proposal.

Step 5: - Deliver

If you can, deliver a draft proposal in a face-to-face meeting and walk them through what you are thinking. Again, get their input, buy-in and feedback.

Step 6: - Close

Then send them a final proposal, with all your agreed points. If you make any changes from what was agreed, go back to them and let them know.

I hope this helps.
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Maya is hoping to hire lifeguards to work at her community pools this summer. What is the first step she must take in this proce
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