mgmt2023, Business Management

Assignment Help:
A company is considering whether to purchase a piece of land that has come up for sale at a cost of $10 million. Two suggestions have been made for the use of the land. One is to construct a number of private houses for sale and the other is to construct an amusement park. The company’s management accountants have made the following estimates of both projects’ net cash flows (including the cost of the land):



Year


Private House

($ Million)


Amusement Park ($ Million)

0


-10


-10

1


-5


-8

2


+7


+4

3


+9


+6

4


+4


+8

5





+7

6





+9



The company uses NPV to evaluate projects and normally takes 10 % as a discount rate for the house-building investment and 18% as the discount rate for the amusement park. The IRR of the housing investment is 12.5% and the amusement part produces a return of 18.6%. Which is the better investment decision for the shareholders of the company? Show all calculations.


Related Discussions:- mgmt2023

Process planning and control, With the best of process planning and cont...

With the best of process planning and control certain defect may still be revealed during assembly or in final inspection. In that situation proper investigation must be

What is role of bpel? , BPEL is a language for relatively easy description ...

BPEL is a language for relatively easy description of how web services are composed into business processes. BPEL is the first of its kind. BPEL ? Permits abstract and execut

Farm planning, iimportance of farm planning to the farmer

iimportance of farm planning to the farmer

Assament.., Question One: (2.5 Marks) Suppose you are a senior manager in...

Question One: (2.5 Marks) Suppose you are a senior manager in a global management consulting company. Which conflict management style do you think is the best and would you adopt

Standardization and simplification of inventories, For proper inventory c...

For proper inventory control standardization of materials and products as well as simplification of the production line is necessary standardization refers to limiting o

Marketing Planning, How organizations like Pepsi response to ethical issues...

How organizations like Pepsi response to ethical issues?

2. Identify any one Charismatic leader in an organization, Use the features...

Use the features of Charismatic Leadership to analyse the man or woman.

Define quality measures and quality costs, Take examples of some common ser...

Take examples of some common service-oriented industries. For example, consider a commercial airline company and a company in the hotel business. For both these companies: De

Define the term environmental impact, Question 1: (a) Define the term "...

Question 1: (a) Define the term "Environmental Impact" and elaborate on the main impact categories. (b) Describe what is an EIA and highlight its importance. (c) Using an

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