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- June 6, 2020 at 9:31 pm
I have a question,
Is residual income directly related to the NPV and does it make sure that managers will select project with positive NPV?June 7, 2020 at 10:19 amNo – it I s not directly related to the NPV.
NPV is based on future expected cash flows, whereas the RI is calculated on profits and when making a decision managers are estimating the short-term effect.
Have you watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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