ACCT-311 Lecture Notes - Lecture 1: Spreadsheet, Net Present Value

• School: MacEwan University
• Department: Accounting
• Course: ACCT-311
• Professor: A N O N Y M O U S

Document Summary

This is net gain in wealth in dollar terms ($), so accept the project only if npv > 0. Choose between mutually exclusive projects on the basis of higher npv, as it adds the most value. Npv > 0 implies eva > 0 and mva > 0. Independent if the cash lows of one are unafected by the acceptance of the other. Mutually exclusive; if one project is accepted, the other must be rejected. If project s and project l are mutually exclusive, accept s because npvs > npvl . If s and l are independent, accept both because npv > 0. If irr > wacc, then the project"s rate of return is greater than its cost, adding extra values to stockholders. Irr is internal to the project and does not depend on the market interest rate. Given in %, irr provides an easy measure of proitability.