FNT1-TASK2-HINTS - in budgeting decisions WACC should be...

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Here are some tips for calculating IRR. 1. You should use an excel formula or function to calculate IRR for you. 2. In order for excel to calculate IRR you need to have both a positive and negative number. In this case your negative number will be your investment amount. 3. You will use your Net Cash Flows per Year when calculating IRR. 4. Hint: Your investment amount for NPV, IRR, and Payback Period should include working capital. ================== The first thing you need to do is understand and define the Weighted Average Cost of Capital. This sometimes called the Hurdle Rate. In your presentation you need to explain what WACC is, who sets it, how it is displayed (dollar amount, % ) How is WACC used
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Unformatted text preview: in budgeting decisions. WACC should be covered in the Capital Budgeting section of the textbook or in the MyAccountingLab resource. ===================== Not exactly Paul. The Weighted Average Cost of Capital or the Hurdle rate is the minimum amount that the company is willing to accept as a return on a project. The WACC is compared to NPV, IRR, and ARR to determine if the project is acceptable. Does that make sense? Again, once you define what the WACC is and what it means you can compare it to other investment alternatives. =====================================================...
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