Understanding NPV & Real Options

[ad_1]

This discussion has 2 parts:

  1. Understanding what the net present value (NPV) tells us.
    • The NPV decision rule says to accept the project if the NPV is greater than zero. You perform a thorough capital budgeting analysis on a project that requires a $1,000,000,000 initial investment and calculate the net present value (NPV) as $1. Following the rule, you tell your boss she should accept the project. She laughs and says “do you think I would really invest $1,000,000,000 for a measly $1 NPV? You should be fired” How would you respond to her?
  2. Real Options
    • Give two examples of “real options” that you have come across in your professional life, or that may come up in projects in a business you wish to start, or that may come up in the projects at a company in which you hope to be employed.

Submission Instructions:

  • Your initial post should be at least 200 words, formatted and cited in current APA style with support from at least 2 academic sources. Your initial post is worth 8 points.
  • You should respond to at least two of your peers by extending, refuting/correcting, or adding additional nuance to their posts. Your reply posts are worth 2 points (1 point per response.) 

The post Understanding NPV & Real Options appeared first on My private mentor.

[ad_2]

Source link

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp