公司财务,第十版,课后答案

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1、Chapter 05 - Net Present Value and Other Investment RulesCHAPTER 5 NET PRESENT VALUE AND OTHER INVESTMENT RULES Answers to Concepts Review and Critical Thinking Questions1.Assuming conventional cash flows, a payback period less than the projects life means that the NPV is positive for a zero discoun

2、t rate, but nothing more definitive can be said. For discount rates greater than zero, the payback period will still be less than the projects life, but the NPV may be positive, zero, or negative, depending on whether the discount rate is less than, equal to, or greater than the IRR. The discounted

3、payback includes the effect of the relevant discount rate. If a projects discounted payback period is less than the projects life, it must be the case that NPV is positive.2.Assuming conventional cash flows, if a project has a positive NPV for a certain discount rate, then it will also have a positi

4、ve NPV for a zero discount rate; thus, the payback period must be less than the project life. Since discounted payback is calculated at the same discount rate as is NPV, if NPV is positive, the discounted payback period must be less than the projects life. If NPV is positive, then the present value

5、of future cash inflows is greater than the initial investment cost; thus, PI must be greater than 1. If NPV is positive for a certain discount rate R, then it will be zero for some larger discount rate R*; thus, the IRR must be greater than the required return.3.a.Payback period is simply the accoun

6、ting break-even point of a series of cash flows. To actually compute the payback period, it is assumed that any cash flow occurring during a given period is realized continuously throughout the period, and not at a single point in time. The payback is then the point in time for the series of cash fl

7、ows when the initial cash outlays are fully recovered. Given some predetermined cutoff for the payback period, the decision rule is to accept projects that pay back before this cutoff, and reject projects that take longer to pay back. The worst problem associated with the payback period is that it i

8、gnores the time value of money. In addition, the selection of a hurdle point for the payback period is an arbitrary exercise that lacks any steadfast rule or method. The payback period is biased towards short-term projects; it fully ignores any cash flows that occur after the cutoff point.b.The IRR

9、is the discount rate that causes the NPV of a series of cash flows to be identically zero. IRR can thus be interpreted as a financial break-even rate of return; at the IRR discount rate, the net value of the project is zero. The acceptance and rejection criteria are:If C0 0 and all future cash flows

10、 are positive, accept the project if the internal rate of return is greater than or equal to the discount rate. If C0 0 and all future cash flows are negative, accept the project if the internal rate of return is less than or equal to the discount rate.If C0 0 and all future cash flows are negative,

11、 reject the project if the internal rate of return is greater than the discount rate. IRR is the discount rate that causes NPV for a series of cash flows to be zero. NPV is preferred in all situations to IRR; IRR can lead to ambiguous results if there are non-conventional cash flows, and it also may