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Flashcards in GPFP - 9 Deck (8)
0

The two time value of money calculations that can be used to analyze the attractiveness of a particular project, or to compare alternative project choices

NPV and IRR

1

If NPV calculation is positive, the investment is ___ investment.

a good

2

If NPV calculation is negative, the investment is ___ investment.

not a good

3

NPV of zero would indicate that the investment is?

Breaking even

4

Which time value of money calculation calculates the discount rate at which the present value of the cash inflows equals the present value of the cash outflows?

IRR

5

The IRR is the rate at which NPV is?

Equal to zero

6

If the IRR is larger than the investor's required return or cost of capital, the investment is?

Attractive

7

And the IRR is below the investor's required return or cost of capital, investment is?

Not attractive