Compare the following strategy, which one would lead to the largest chance of changing a project's...

Question

Question

Compare the following strategy, which one would lead to the largest chance of changing a projects net present value (NPV) fr

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Reducing the risk of the project

NPV is very much dependent on discount rate and discount rate is dependent on risk of the project.

Add a comment

Answer 2

Similar Homework Help Questions

Compare the following strategy, which one would lead to the largest chance of changing a project's...

Compare the following strategy, which one would lead to the largest chance of changing a project's net present value (NPV) from negative to positive? A:Reducing the maturity of the debt B. Selling the debt at less than par value C. Reducing the risk of the project D: Substituting preferred stock for debt
Which of the following changes offer the greatest chance of changing a project's NPV from negative...

Which of the following changes offer the greatest chance of changing a project's NPV from negative to positive? A) A reduction in project risk. B) Selling the debt at less than par value. C) A decrease in the marginal tax rate. D) Substituting preferred stock for debt. Which one?
17. If the profitably index for a project exceeds 1, then the project's net present value...

17. If the profitably index for a project exceeds 1, then the project's net present value is positive a. b. internal rate of return is less than the projects's disount rate. payback period is less than 5 years. d. c. Accounting rate of return is greater than the project's rate of return. 18. If a project's profitability index is less than 1, the project's a. discount rate is above its cost of capital. b. Internal rate of return is less...

3. Which one of the following statements is TRUE about a project's net present value? A....

3. Which one of the following statements is TRUE about a project's net present value? A. When choosing between projects, a company should take on the project with the lowest net present value B. When deciding to accept or reject a project, a company should reject the project if its net present value is positive C. A project's net present value provides the payback period of an investment B. When deciding to accept or reject a project, the project's net...
Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one...

Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 $375,000 $425,000 $500,000 Year 3 Year 4 $400,000...
1. The ________ considers the project's risk relative to the firm overall risk. A. The Objective...

1. The ________ considers the project's risk relative to the firm overall risk. A. The Objective Approach B. The Pure Pay Approach C. The Subjective Approach D. The Bottom-Up Approach 2. ________ are not tax deductible, so there is no tax impact on the cost of equity. A. Interest expenses B. Director's remuneration C. Dividends D. All of the above 3. ________ itself is a non-cash expense and it is only relevant because it affects taxes. A. Depreciation expense B....

Making the accept or reject decision Pheasant Pharmaceuticals's decision to accept or reject project Alpha is...

Making the accept or reject decision Pheasant Pharmaceuticals's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NPV method, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of $0? When a project has an NPV of $0, the project is earning a rate of return less than the project's weighted average cost of capital. It's OK to...
Question 17 5 pts The following will be used to answer the next question Debt: 15,000...

Question 17 5 pts The following will be used to answer the next question Debt: 15,000 10% coupon bonds outstanding, 30 years to maturity, selling for 106 (bonds have a $1000 par value with semiannual interest payments) Preferred Stock: 20,000 shares of 7% preferred stock outstanding with a par value of $100 and currently selling for $128 per share Common Stock: 300,000 shares outstanding selling for $80 per share, the beta is 1.5, the risk-free rate is 6% and the...
Which of the following statements is correct? A project's discounted payback period (DBP) is normally shorter...

Which of the following statements is correct? A project's discounted payback period (DBP) is normally shorter than its traditional payback period (PB) because DPB accounts for the time value of money, whereas PB does not. To compute the NPV for a project, the firm's required rate of return must be known. To compute a project's internal rate of return (IRR), the firm's required rate of return is not used because the IRR is the discount rate where the project's NPV...

Question 18 5 pts The following will be used to answer the next question. Debt: 15,000...

Question 18 5 pts The following will be used to answer the next question. Debt: 15,000 10% coupon bonds outstanding, 30 years to maturity, selling for 106 (bonds have a $1000 par value with semiannual interest payments) Preferred Stock: 20,000 shares of 7% preferred stock outstanding with a par value of $100 and currently selling for $128 per share. Common Stock: 300,000 shares outstanding selling for $80 per share, the beta is 1.5, the risk-free rate is 6% and the...

Compare the following strategy, which one would lead to the largest chance of changing a project's...

Homework Answers