Week 3 Essay

1. NPV

 

According to the text, the NPV rule states that “An investment should be accepted if the NPV is positive and rejected if it is negative.” What does an NPV of zero mean? If you were a decision-maker faced with a project with a zero NPV (or very close to zero) what would you do? Why?

 

2. FORECASTING ERROR (RISK)

 

What is a “forecasting error”? Why is it important to the analysis of capital expenditure projects?

 

Please number each of your answers. This is very important so that I understand which questions you are responding to. 

 

 

Assignment Grading Criteria:

Thoroughly answered all of the questions: 60 points possible

Spelling/Grammar at the college level: 20 points possible

References to course material using proper APA format: 20 points possible

Total: 100 points

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