Reference no: EM133027688

Question - Based on the date from the two problems below which of these alternatives is better for the company? The original method, the modification suggested in problem 1, or the modification in problem 2? Why?

1. The original spreadsheet numbers the original net present value is $72,591. Please run a net present value breakeven using this original data and record the net present value level of sales here $568,503. Prior to beginning this project, the company can increase the initial outlay by $150,000. This additional upfront acquisition stage cost would lower the variable costs to 30% of sales and increase the disposition value to $550,000. What is the new net present value $-14,811, and the new net present value breakeven level of sales $606,249, and would this be a good move for the company?

2. As an alternative before beginning this project, the company can reduce the initial outlay by $300,000. This would increase the variable costs to 50% of sales and decrease the disposition value to $400,000. What is the new net present value $1,095,472, and the new net present value breakeven level of sales$29,612, and would this be a good move for the company?