Compute the net present value using the numbers provided

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Reference no: EM1352696

1. Compute the net present value using the numbers provided. Assume that annual cash flows occur at the end of the year.

2. Mr. Burns is concerned that the original estimates may be too optimistic. He has sug gested that you do a sensitivity analysis assuming all costs are 10% higher than expected and that all inflows are 10% less than expected.

3. Identify possible flaws in the numbers or assumptions used in the analysis, and identify the risk(s) associated with purchasing the equipment.

4. In a one-page memo, provide a recommendation based on the above analy sis. Include in this memo:

(a) a challenge to store and Wall management and

(b) a suggestion on how Greetings stores could use the computer connection for related sales.

Reference no: EM1352696

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