The Basics of Capital Budgeting: Evaluating Cash Flows respond to the following: Elaborate on why the net present value (NPV) of a relatively long-term project is more sensitive to changes in the cost of capital than is the NPV of a short-term project. Provide two examples of NPV that support your position.
From the e-Activity, analyze the reasons why the short-term project that you have chosen might be ranked higher under the NPV criterion if the cost of capital is high, while the long-term project might be deemed better if the cost of capital is low. Determine whether or not changes in the cost of capital could ever cause a change in the internal rate of return (IRR) ranking of two such projects. Provide an example of such a change or the lack of one to support your position.
Cash Flow Estimation and Risk Analysis Please respond to the following: If a firm decides to structure a project so that expenditures may be made in stages rather than all at the beginning, predict the manner in which this would affect the project’s risk and expected NPV. Support your position with one real-world example of such an effect.From the scenario, take a position for or against TFC’s decision to expand to the West Coast. Provide a rationale for your response in which you cite at least two capital budgeting techniques