Project detroit should be pursued as it has the superior npv, Business Management

Assignment Help:

b) Based on these figures, Project Detroit should be pursued as it has the superior NPV. Even though both projects yield the same absolute amount of net cash flow (each totalling $550,000), Project Colorado does not observe most of its returns until the final two years, i.e. when the money has lost much of its value. In addition, the payback period for Detroit is shorter (just 2 years). The ARR is the similar for both projects (since DCF are not considered in the calculation of ARR). Other quantitative factors may also necessitate to be considered, e.g. management preferences.

Year

Investment Colorado

Investment Detroit

Net Cash Flow ($)

Discount Factor

Present Value ($)

Net Cash Flow ($)

Discount Factor

Present Value ($)

0

(300,000)

1.00

(300,000)

300,000

1.00

(300,000)

1

50,000

0.9524

47,620

100,000

0.9524

95,240

2

100,000

0.9070

90,700

200,000

0.9070

181,400

3

200,000

0.8638

172,760

200,000

0.8638

172,760

4

200,000

0.8227

164,540

50,000

0.8227

41,135

NPV

 

175,620

 

190,535






 


Related Discussions:- Project detroit should be pursued as it has the superior npv

Business communication, How communication helps in the operator of business...

How communication helps in the operator of business? I don''t solve the question perfectly please give some solution

Free-market quantity of public goods, We said in class that public goods in...

We said in class that public goods involve externalities. Are the externalities associated with public goods generally positive or negative? Use an example in your answer. Is th

Business rules for management system of a company, The following set of 'ru...

The following set of 'rules' apply to the operational procedures and practices of the XYZ Shop you have been contracted to build a management software application for. These rules

Instructional leadership, Academicians are constantly pursuing ways for ref...

Academicians are constantly pursuing ways for reforming the strategies and systems in education in view to improve its quality as well as its outcome. Developing efficacy to addres

Impacting upon intercultural communication, QUESTION 1 Distinguish betw...

QUESTION 1 Distinguish between the three broad theoretical frameworks that attempt to provide an explanation and understanding of communication and culture. QUESTION 2

Developing plans for areas of responsibility, Work Breakdown Structures (WB...

Work Breakdown Structures (WBS) - explain the value, role and use of the WBS methodology in project management. Planning within organizations takes place at strategic, tactical

Enteprenuership and SMEs, Solutions to a gradual decline in sales in an ind...

Solutions to a gradual decline in sales in an indian restaurant in London

Define the term waste management, (i) Define the term waste management (...

(i) Define the term waste management (ii) You are requested to come up with a proposal for the management of solid wastes arising from a community living in an island. Given tha

Mr, three ogarnizational attitudes

three ogarnizational attitudes

Describe the characteristics of an effective team, QUESTION 1 a) Descri...

QUESTION 1 a) Describe the characteristics of an effective team b) Discuss the main features that contribute to the proper functioning and creativity of a team c) Assess

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd