Net Present Value was used because the idea of NPV is to
try to express all future values in terms of the present. Thus,
to make the values occurring at different times comparable at
least with respect to time. Some of its merits are; easy to calculate,
easy to understand and interpret, it saves time among
others. However, despite its advantages, there are some flaws
as far as NPV is concerned, some of which include the choice
of interest rate. The choice of interest rate is a problem that
cuts across all the other investment criteria. However, its advantages
are more overwhelming as compared to the internal
rate of return which is somewhat cumbersome to follow. The
decision rule is that, if the NPV is greater than zero we accept
the project but if NPV is less than zero then we reject.
Also the benefit cost (BCR) ratio was used in this study.
The decision rule is that we accept the project if the BCR ≥ 1
and when the cost and benefit streams are discounted at the
opportunity cost of capital. Thus if BCR > 1 it implies that
Fruit juice processing is profitable, if BCR < 1 it implies not
profitable and if BCR = 1, the investment break even (Gittinger,
1996).
Net Present Value was used because the idea of NPV is totry to express all future values in terms of the present. Thus,to make the values occurring at different times comparable atleast with respect to time. Some of its merits are; easy to calculate,easy to understand and interpret, it saves time amongothers. However, despite its advantages, there are some flawsas far as NPV is concerned, some of which include the choiceof interest rate. The choice of interest rate is a problem thatcuts across all the other investment criteria. However, its advantagesare more overwhelming as compared to the internalrate of return which is somewhat cumbersome to follow. Thedecision rule is that, if the NPV is greater than zero we acceptthe project but if NPV is less than zero then we reject.Also the benefit cost (BCR) ratio was used in this study.The decision rule is that we accept the project if the BCR ≥ 1and when the cost and benefit streams are discounted at theopportunity cost of capital. Thus if BCR > 1 it implies thatFruit juice processing is profitable, if BCR < 1 it implies notprofitable and if BCR = 1, the investment break even (Gittinger,1996).
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