Investment Appraisal: Net Present Value

What method covers both timing and profitability factors in investment appraisal?

Payback period
Internal rate of return
Net present value
Average rate of return

Why is choosing the appropriate discount factor crucial in discounted cash flow analysis?

Selecting the highest discount factor always leads to the best project outcomes.
Choosing right discount factor impacts project's net present value.
The discount factor has no impact on the project's net present value.
Using a random discount factor does not affect the accuracy of discounted cash flow analysis.

How can the discounted cash flow method be used to assess the financial feasibility of launching a new product line?

Estimate the expected cash flows from the new product line and calculate the gross present value.
Estimate the expected cash flows from the new product line, discount them to present value, and calculate the gross present value.
Estimate the expected cash flows from the new product line, discount them to present value, and calculate the net present value.
Estimate the expected cash flows from the new product line, discount them to future value, and calculate the net present value.

If a company is considering expanding its operations into a new market, how could the discounted cash flow method assist in making this decision?

By ignoring future cash flows from the expansion and only considering the initial investment.
By estimating future cash flows from the expansion, discounting them to present value, and comparing the total to the initial investment.
By estimating past cash flows from the expansion, discounting them to present value, and comparing the total to the initial investment.
By using the discounted cash flow method to calculate profits instead of cash flows from the expansion.

Given the explanation of investment appraisal methods, how would a company decide on the appropriate discount factor for a new investment project in a highly volatile market?

The company would likely choose a higher discount factor to account for the increased risk.
The company would use a discount factor that is unrelated to the market volatility.
The company would choose a lower discount factor to minimize the risk.
The company would select a discount factor based on the current market trends.