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Below is the response from our tutor to one of my...




Below is the response from our tutor to one of my class mate. his solution attached. please read his attached solution and help me prepare response to below questions: There is another fairly popular method, somewhat simple but effective if used properly: the discounted payback method. It combines the simplicity of the payback method with some appreciation of the importance of the time value of money. As to the IRR and its drawbacks. From the angle of a longer term project, frankly, neither NPV nor IRR provide any room for flexibility. There are other methods to account for possible changes in the discount rate and economic conditions which go beyond the scope of this class: real options. As to the IRR: it may produce multiple faulty rates of return if the project is expected to experience cash flows with changes of sign. There is, however, another drawback of IRR related to the way the IRR for the project is calculated. What is that drawback, please?,I think you have attached wrong document. It seems to you have given same solution what I gave. Please resend the right response to my question.


Paper#7055 | Written in 18-Jul-2015

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