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

Illustrate the total quality management briefly, Illustrate the Total Quali...

Illustrate the Total Quality Management briefly. Total Quality Management (TQM) is a system approach to quality within all spheres of the organisation. TQM implies meeting the

Explain engineering business functions, Identify and explain engineering bu...

Identify and explain engineering business functions. Draw out an organisation chart for an organisation of your choice and explain the roles and functions of an engineering bus

Operates the business, Examine this business leader's leadership style and ...

Examine this business leader's leadership style and talk about how he or she has adapted to cultural differences and how he or she operates the business effectively in global marke

What caused the great depression, The business boom of the 1920s made peopl...

The business boom of the 1920s made people overly confident thus; they invested their money in risky stocks and deals. In addition, banks made careless loans and soon failed when p

Row minima methods, Row Minima Methods: Steps1: The smallest cost  i...

Row Minima Methods: Steps1: The smallest cost  in the first  row  of the  transportation table  is determined. Let it be C 1j   . allocate as much  as possible amount X 1j

Steps when selecting and finalizing a provider, What are the factors that m...

What are the factors that must be considered when selecting and finalizing a provider? Deciding on Providers - creation of own unique list of key characteristics for each of i

Conduct a force-field analysis, Enacting change is difficult. The forces th...

Enacting change is difficult. The forces that create the need for change often bump up against equally powerful forces of resistance. Think of an organization with which you are fa

Circulars and notices , Distinguish between circulars and notices along wit...

Distinguish between circulars and notices along with formats

Planning for Long-Term Success, You are to write a three to four (3–4) page...

You are to write a three to four (3–4) page paper that answers the following: Once an organization has identified its business foundation, it begins the process of developing

Describe briefly two online advertising methods, QUESTION (a) Describe ...

QUESTION (a) Describe briefly five main features of an effective e-Business website. (b) Explain the terms intranet and extranet, and their importance in an e-Business compa

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