## CHECK THESE SAMPLES OF NPV, PI, IRR, and Payback

...cash flows after the discounted **payback** period. As there are flaws in the **payback** methods, these methods cannot be considered as most reliable in evaluating future projects. Hence in order to be more effective in evaluating projects, Net Present Value method is considered to be the most reliable and effective method in evaluating future projects. Unlike the **payback** methods, the Net Present Value method does take distant future cash flows into account (after the cut-off **payback** period). **NPV** rule is important as it takes time value of money into account as a dollar today is worth more than a dollar tomorrow, the reason being that the dollar today can be...

4 Pages(1000 words)Essay

... **IRR** and MIRR in learning institutions has been a cause of concern, with claims that the **IRR** technique has had more attention at the expense of the MIRR valuation method. This paper focuses on analyzing **IRR** and MIRR with regard to major issues of concern, emerging issues, factors that have been instrumental in the understanding of **IRR** and MIRR in class situations, and present and future applications of the two valuation methods. Keywords: **IRR** (Internal Rate of Return), MIRR (Modified Internal Rate of Return), **NPV** (Net Present Value) Table of Contents Abstract 2 Table of Contents 3 introduction 3 Main issues in **IRR** 4 Main issues in MIRR 6 New Learning in **IRR** 6 New Learning in MIRR 7 Class activities that have facilitated learning... internal...

9 Pages(2250 words)Research Paper

...pick up the option, which gives higher rate of return considering time value factor of money. This is why it is important in strategic management. Without capital budgeting strategic management team will enter into a wrong selection.
Question 2. Explain why the **NPV** and **IRR** capital budgeting tools are superior to the accounting rate of return and simple **payback** techniques for determining the attractiveness of capital investment opportunities.
Answer.
Capital budgeting technique uses different tools or approaches to assessing the future investment. Among them are; **Payback** method, Accounting rate of return method, Net present value method (**NPV**),...

6 Pages(1500 words)Assignment

...Life of **Pi** Introduction Life of **Pi** portrays deeply spiritual ideas of the world’s three primary religions that are Hinduism, Islam and Christianity. The bulk of the film describes **Pi’s** ordeal as he survives on a lifeboat in the Pacific Ocean. Life of **Pi** is virtually impossible to classify in any given genre. It can be characterized as a postcolonial film because of its setting in post-independence India and its Canadian authorship (Miller, 110). Like many postcolonial films Life of **Pi** can be considered an example of magical realism, a literary genre in which fantastical elements like animals with human personalities or an island with carnivorous trees...

8 Pages(2000 words)Research Paper

...received from the right in an account returning 12% per year simple interest?
220,000
4. Essay. Discuss the relationship between the Net Present Value (**NPV**), Internal Rate of Return (**IRR**), Accounting Rate of Return (ARR) and **Payback** Method as methods of project appraisal. Why are these methods used by managers, even when some lag behind in terms of effectiveness? Which one do you prefer and why, give example.
**IRR**, ARR, **Payback** and **NPV**
All four methods of evaluating investments offer the notion of an investment and a return. The Accounting Rate of Return and **Payback** method do not offer a time value of money. ...

7 Pages(1750 words)Essay

...Finding the Value of **Pi** Table of Contents Finding the Value of **Pi** Table of Contents 1. Introduction 2.History of **Pi** 3.Ancient Method: Archimedes’s Method for Finding the Value of π 4
4.Modern Method: Borweins’ Algorithm For Computation of π 7
5.Conclusion 8
Bibliography 9
1. Introduction
The challenge posed by the ubiquitous mathematical entity called “**Pi**” (π) has intrigued mankind from time immemorial. Defined as the constant ratio between the circumference of a circle and its diameter, this number has drawn the attention of mathematicians of all periods in the history, mainly because it is an irrational number with a literally unending series of places after the...

8 Pages(2000 words)Research Paper

...Capital Budgeting Table of Contents Table of Contents 2 Introduction 3 0 Net Present Value (**NPV**) 6 1 Advantages of Net Present Value (**NPV**) 7 2 Disadvantages of Net Present Value (**NPV**) 8
2.0 Internal Rate of Return (**IRR**) 9
2.1 Advantages of **IRR** 9
2.2 Disadvantages of **IRR** 11
3.0 Discounted **Payback** Period 11
3.1Advantages of Discounted **Payback** Period 11
3.2 Disadvantages of Discounted **Payback** Period 12
4.0 Modified Internal Rate of Return (MIRR) 12
4.1 Advantages of MIRR 12
4.2 Disadvantages if MIRR 14
5.0 Profitability Index 14
5.1Advantages of Profitability Index...

7 Pages(1750 words)Research Paper

...difficulty to make accurate forecast of the future cash flows and another is its vulnerability of manipulation through different discount rates as there is no standard to set a discount rate (Michel, 2001).
Internal Rate of Return
Definition
Internal Rate of Return or also called yield on project is actually the rate of return of the investment project earned over the useful life of the project. The benefits and cost of the project are equal to each other at this discount rate. In other words, it is the discount rate where the **NPV** of the project is zero (Accounting4managment, n.d).
Calculation Method
There is no specific direct formula for manual calculation of **IRR**. Instead, the calculation is based...

5 Pages(1250 words)Research Paper

..., there are many legal constraints and political pitfalls associated with foreign investment. These could potentially impede such an entry. Additionally, investment in a new venture can be suicidal and hence it is advisable to do it through an existing company.
Financial Analysis
From the financial stand point, the company’s intended expansion stands at an advantageous position. The past and projected asset growth, revenues expected cash flow and a favorable **NPV** all stand in favor of the proposed business strategy.
2012
2013
2014
2015
2016
2017
2018
Cost of Capital
18
6.00
6.00
7.00
8.00
8.00
7.00
Revenue
30.10
34.20
38.10
40.40
45.60
50.00
Cost of Capital
18.00
1.08
1.08
1.26
1.44
1.44
1.26
Gross...

3 Pages(750 words)Assignment

...into consideration discounting of future cash inflows to arrive at the present value of net inflow. **Payback** period helps in understanding the liquidity factor associated with projects ignoring the profitability factor completely. The system takes into consideration only the inflow of cash prior to the **payback** period and does not consider the cash inflows after it (Bierman and Smidt, 2007).
Net present value
The net present value (**NPV**) is the difference between the net present value of future cash inflows and the initial investments made in the project. The present value of future cash inflows is calculated by discounting the future cash inflows using the rate of return factor. The...

8 Pages(2000 words)Assignment