What is net present value (NPV)? Can this ever be negative? Explain.
How is MACRS depreciation different than straight-line depreciation? What advantages does MACRS provide? Provide examples.
What is the major criticism of the payback period and simple rate of return (sometimes called accounting rate of return) methods of making capital budgeting decisions?
You have a choice of two separate investment opportunities - each of them has an initial investment of $3,000. Option A will provide you no return in year 1 and $2,200 in years 2 and 3. Option B will provide you $1,000 in year 1, $1,000 in year 2 and $2,200 in year 3. Which option would you choose and why? (This question is worth 3 points and you will have one opportunity to answer it correctly. You must show your calculations in order to receive full credit. Use the PV/FV charts included with the Learning Document in Canvas.)
Your classmate is struggling with the time value of money concept. Please explain this is your own words to help them comprehend.