Question
DB 1
Why would a company use the Internal Rate of Return versus the Payback method when evaluating investment options? What are the limitations of these two methods? 200 words
 
 
DB 2
This question is based on your Web Field Trip. 

Is your investment in a college education a positive or negative NPV project? Does the NPV of your investment in education effectively measure the true value of an education?
 
Web Field Trip
Go to the “Calculators” section of the FinAid website (http://www.finaid.org) at http://www.finaid.org/calculators/ . Click the College Cost Projector link under the “Costs” heading, and use the calculator to estimate the cost of your education until graduation (use a 7% tuition inflation rate).
Next, go to http://www.usatoday.com/news/nation/census/2002-07-18-degree-dollars.htm and read the article on how much more a college graduate earns over their earning life than a high school graduate.
Next, estimate how much more a college graduate earns each year versus a high school graduate. Estimate how long your working life is until retirement.
Finally, use your favorite search engine to find an online calculator to assist in calculating the net present value. Enter the cost of your estimated college education (as a negative - it is an investment you are spending money on). Estimate the life of your working career and pick an appropriate discount rate.
Be prepared to discuss your findings in the Discussion area 250 words
Grade: University | Subject: Business
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DB 1

Even though the payback method was straight forward a company would use Internal Rate of Return verses the Payback period because the payback period ignores the time value of money. It also ignores about any advancements that may happen after the payback method and hence it failed in measuring…

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