12.6.2. Tools and Techniques

Try these first

1. 1.

   What does NPV stand for?

   Hint

   Think of financial evaluations.

2. 2.

   What does IRR help determine?

   Hint

   Related to NPV.

3. 3.

   What is NPV?

   • Net Profit Value
   • Net Present Value
   • Next Project Value

   Hint

   It's a crucial financial term.

4. 4.

   True or False: A higher IRR indicates a more profitable investment.

   • True
   • False

   Hint

   Compare it to investment costs.

5. 5.

   Analyze a project with an initial investment of $150,000 expected to generate$50,000 annually for four years. At a discount rate of 8%, calculate the NPV.

   Hint

   Calculate each cash inflow's present value first!

6. 6.

   A company plans to launch a product costing $100,000. Using a CVP analysis, if the product sells for$20 with variable costs of $10, how many units must be sold to break even?

   Hint

   Use the revenue and cost per unit to find the break-even volume!