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

Historical versus implied volatility, There are two ways to estimate ...

There are two ways to estimate yield volatility - historical volatility and implied volatility. Thus far we have discussed how to calculate volatility by estimati

Clemson software, Clemson Software is considering a latest project whose da...

Clemson Software is considering a latest project whose data are given below.  The needed equipment has a 3-year tax life, after which it will be worthless,and it will be depreciate

Periodic system, limitations of using a periodic inventory system

limitations of using a periodic inventory system

Financial statement analysis report, Financial statement analysis report: ...

Financial statement analysis report: 1. Perform a comparative analysis (horizontal analysis). Analyze two items on the balance sheet and two items on the income statement for

What do you mean by interest rate swap, What do you mean by Interest rate s...

What do you mean by Interest rate swap? Explain the various types of interest rate swap Meaning: It is an arrangement where by one party exchange one set of interest rate paymen

Explain economic order quantity, Q. Explain Economic Order Quantity? Ec...

Q. Explain Economic Order Quantity? Economic Order Quantity (EOQ):- Economic order quantity (EOQ) is that quantity of material for which each order must be placed. Purchasing l

Case let, This case has been framed in order to test the skills in evaluati...

This case has been framed in order to test the skills in evaluating a credit request and reaching a correct decision. Perluence International is large manufacturer

Calculate the variance of the dollar value of your property, Assume that yo...

Assume that you hold a piece of land in the City of London that you may wish to sell in one year. Like a U.S. resident, we are concerned along with the dollar value of the land. Su

Why auditors need to attain audit evidence, Why auditors need to attain aud...

Why auditors need to attain audit evidence When significant fluctuations/unexpected relationshipsare identified which are inconsistent with  other  relevant  information  or  t

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