Answer to Question #53292 in Microeconomics for nasser
A- Explain fully the concept of net present value. Why must firms use net
present value to determine if an investment is profitable?
B- Assume that managers take two years off without pay to complete an MBA.
Use the concepts of opportunity cost and net present value to explain how
you would measure if an MBA is profitable?
A - Net present value (NPV) is determined by calculating the costs (negative cash flows) and benefits (positive cash flows) for each period of an investment. Because of its simplicity, NPV is a useful tool to determine whether a project or investment will result in a net profit or a loss. A positive NPV results in profit, while a negative NPV results in a loss. The NPV measures the excess or shortfall of cash flows, in present value terms, above the cost of funds.
B - If managers take two years off without pay to complete an MBA, then an MBA will be profitable, if the opportunity costs will be comparatively low and net present value of such kind of investment will be positive.
From a young age, our brains develop to the world around us, the environment we live in, and the people…
APPROVED BY CLIENTS
Always satisfied assignment results and explanation of them so that I could study with it! However, the one thing I would like to concern is about the price. I would like to know how you guys make the price. For me, I don’t actually think that the price is always reasonable since I don’t know how the price is offered and made. It will be much better if you guys offer like a rubric something about prices to customers so that we could understand. Anyway, I do appreciate the efforts that experts have made for me. Thank you!