Topic: capital budgeting Techniques and complex investment Decisions

Customer status: New

Pages: 8/2200 words

Urgency: 2 Days

Sources: 15

Writer ID: 00258

Customers Instructions: Please answer the following question:

  1. 1.Why should you not compare the simple NPV of mutually exclusive projects with different lives? What is the correct procedure to compare such projects?
  2. 2.Show with the help of an illustration that the annual equivalent value and the NPV for infinite period procedures lead to the same case for mutually exclusive projects with different lives.
  3. 3.Define capital rationing. Explain how you would select investments projects under one period capital constraint. Would capital rationing lead to sub optimal investment decision?

Writers comment: Though these questions seem hard from a far I was able to use my finance knowledge to answer them in a comprehensive manner. The simple Net Present Value method cannot be compared in mutually exclusive projects with different lives simply because since the two projects have different lives and therefore the annual Equivalent method should be applied. It was also easy to formulate the illustration since I am well aware that AEV needs only the calculation of replacement chains using the Least common multiple. In this Essay I enjoyed the use of my finance essays writing experience.

Customers Feedback: Very satisfied with I got an A in this paper.

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