Two Paragraphs each question


NPV #1

According to the text, the NPV rule states that “An investment should be accepted if the NPV is positive and rejected if it is negative.” What does an NPV of zero mean? If you were a decision-maker faced with a project with a zero NPV (or very close to zero) what would you do? Why?



What is a “forecasting error”? Why is it important to the analysis of capital expenditure projects?