Making capital budgeting decisions

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Reference no: EM131021089

Please provide answers to the seven questions below using your own words and proper citation/research support.  Each question should be 350 words and atleast 3 references.  You should also submit 0% plagiarism check result from Tunitin.  You will need to answer the seven questions accurately to the satisfaction. Please use example, Illustrations and equations where necessary. 

Please write one original paragraph about each of the following specific questions:

1. What is the difference between independent and mutually exclusive projects?

2. In theory, why is NPV considered the "gold standard" technique when making capital budgeting decisions?

3. If a project's NPV is negative, what does this suggest about the desirability of the project?

4. If there are two projects (possibly of different sizes and duration's) but one has a higher IRR than the other, is that always the best project to invest in?

5. What does the IRR of a project measure?

6. If a firm experiences a sudden increase in its cost of capital, thereby increasing their required rate of return on future investment, how would this affect an evaluation of a project's IRR and NPV?

7. In real life, businesses just about never calculate NPV and IRR using manual formula's.  They sometimes use Excel, but most often, they rely upon physical or online calculators to calculate the two measures.  Provide the URLs to access an online NPV and an IRR calculator.

Reference no: EM131021089

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