Financial essay: two paragraphs each questions (2 questions)

 
   

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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?

 

FORECASTING ERROR (RISK) #2

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