# P a g e c compare and contrast the npv rule to the

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c.Compare and contrast the NPV rule to the IRR rule, and identifyproblems associated with the IRR rule (8.4).d.Explain the NPV profile (8.4), compare and contrast the NPV andIRR methods when evaluating independent and mutually exclusiveprojects (8.4), and describe the problems that can arise when usingthe IRR (multiple IRR and no-IRR) (8.4).e.Compute a cross-over rate and explain its importance (8.4).f.Describe and account for the relative popularity of the variouscapital budgeting methods (8.6) and explain the relation betweenNPV and company value and stock price (notes).QUIZ #6: Chapter 8 (5 percent)7.Making Capital Investment Decisions (Chapter 9)a.Define the capital budgeting process, including the typical steps ofthe process, and distinguish among the various categories ofcapital projects (notes).b.Discuss the basic principles of capital budgeting, including thechoice of the proper cash flows and determining the properdiscount rate (9.1 and 9.2).c.Calculate and explain the cash flows for a proposed investment(i.e., initial cash flow, operating cash flow, free cash flow, andterminal year non-operating cash flow) (9.3 and 9.4).d.Determine the impact of a project on firm value using capitalbudgeting methods from chapter 8 and make a recommendation(e.g., accept or reject).e.Define forecasting risk and identify sources of value for a capitalproject (9.5).QUIZ #7: Chapter 9 (5 percent)Part 6-Risk and ReturnMeasure, analyze, and use risk and return concepts andtechniques for managerial and portfolio decision making.8.Risk and Return (Chapter 11)a.Calculate and explain expected returns for single assets and aportfolio of 3 assets (11.1 and 11.2).b.Calculate and explain the variance and standard deviation forsingle assets and a portfolio of 3 assets (11.1 and 11.2).c.Describe the two basic parts of return and determine under whatconditions a news announcement will have no impact on commonstock prices (11.3).d.Compare and contrast systematic (i.e., nondiversifiable risk,market risk) and unsystematic risk (i.e., firm specific risk,idiosyncratic risk, diversifiable risk) (11.4).

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Term
Spring
Professor
Patsy Lewellyn
Tags
Internal rate of return