Business and Finance Homework
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1. In strict economic terms, one should be indifferent to the project when the NPV is 0; however, many projects require further considerations. One should reconsider the project and check if it provides a return just equal to the firm's required return.The nature and type of the project should also be considered. 2. Since capital budgeting analysis contain many assumptions in the calculation process, forecasting errors would exist. Forecasting error is the difference between the forecast results from the actual outcomes. It's important for analysts to understand the existence of errors. Sensitivity analysis should be performed to detect the changes in the assumed inputs to better assess each capital budgeting outcomes.
I need it the answer a lot earlier and not that short....thanks for your help anyways.