A project has a net present value of $2 million.Total cash outflows of this project have a present value of $14 million, which includes staff costs of$10 million.What is the project's sensitivity to staff costs?
Answer(s): A
P Ltd, a manufacturing company, is considering a new capital investment project to set up a new production line. The initial appraisal shows a healthy net present value of $6,465 million at a discount rate of 10% as shown in the table below:However, management is unsure about the demand for the product which will be produced and has insisted that the future revenues should be reduced to certainity equivalents by taking 70%, 65% and 60% of the years 1,2, and 3 cash inflows respectively.What should P do?
Answer(s): D
A capital investment project shows a NPV of £3,450 at a discounted rate of 8% and an NPV of £1,210 at a discounted rate of 9%.What is the internal rate of return?
Return on capital employed (ROCE) can be a useful measure of divisional performance. For which of the following types of company is ROCE likely to be most appropriate?
Answer(s): B
Which TWO of the following are benefits of carrying out a post-completion audit of capital projects?
Answer(s): B,D
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