Demerits of net present value method, Financial Management

Assignment Help:

Q. Demerits of net present value method?

(i) Difficult to Understand as well as Implement:- This method is tricky to understand as well as implement in comparison to the payback and the ARR method.

(ii) Complexity in fixing the required rate of return: - Required rate or else discount rate are the most important in calculating the NPV for the reason that different discount rates will give different present values.

(iii)In case of two projects with irregular initial investment this method mayn't give satisfactory result.

(iv) In case of two projects with dissimilar lives this method may not give satisfactory result.


Related Discussions:- Demerits of net present value method

List a few types of non-price rationing systems, List a few types of non-pr...

List a few types of non-price rationing systems. (a) Queuing. (b) Favored customers. (c) Rationing coupons.

What is exit strategy, Exit strategy Venture capitalists and other fina...

Exit strategy Venture capitalists and other financiers will negotiate an exit strategy at the point of advancing the money. The exit strategy will involve them realising their

Alternative dividend policies, The managing directors of three profitable l...

The managing directors of three profitable listed companies discussed their companies' dividend policies at a business lunch. Company A ; has deliberately paid no dividends for

Market, On January 1 a bond with face value of $1,000 is for sale in the ma...

On January 1 a bond with face value of $1,000 is for sale in the market.  That bond has a coupon rate of 6%, pays interest only once a year and the end of the year, and matures at

Working capital, applicablility of operating cycle of broilers[poultry] in ...

applicablility of operating cycle of broilers[poultry] in uganda

Explain opportunity costs affect the capital budgeting, How do opportunity ...

How do opportunity costs affect the capital budgeting decision-making process? Opportunity costs imitate the foregone benefits of the alternative not chosen while a capital budge

Relation between Inflation and FX, If the 180-day forward rate for the Poun...

If the 180-day forward rate for the Pound were GBPARS 21.45 (today GBPARS 19.5) what does this tell you about inflation in Argentina, explain your assumptions and the link with the

What is affiliated company, Q. What is Affiliated Company? Affiliated C...

Q. What is Affiliated Company? Affiliated Company - Company or other organization related through common ownership,common control of management or owners or through some other

Benefits of the proposed policy change, Q. Benefits of the proposed policy ...

Q. Benefits of the proposed policy change? Short-term sources of debt finance comprise overdrafts and short-term loans. An overdraft offers elasticity but since it is technical

Explain foreign equity ownership restrictions, Explain foreign equity owner...

Explain foreign equity ownership restrictions. Why do you think countries entail these restrictions? Several countries restrict the maximum fractional ownership of local organiza

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd