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

Objective of maintenance management, Objective of Maintenance Management ...

Objective of Maintenance Management 1. Minimizing the loss of productive time because of equipment failure i, e, minimizing idle time of equipment due to break down) 2.

What are the scopes of management information system, What are the scopes o...

What are the scopes of Management Information System? Scope of Management Information System is: a. For giving timely, accurate, relevant and whole information. b. For gi

Benefit to an organization by heath & safety, Heath & Safety in the Workpl...

Heath & Safety in the Workplace 1) There are 5 primary steps in assessing risk in the workplace wrt to H&S, identify 3 and discuss the what actions should be taken to manage or

Intercultural communication and cross-cultural communication, QUESTION ...

QUESTION In 1972, Malcolm McLuhan called the world a "global village". According to the author, we are now living in a historical era characterized by the abundance of internat

Discuss the key benefits of e-business, Question 1: Name and Discuss th...

Question 1: Name and Discuss the key benefits of E-Business? Question 2: (a) Describe the four activities of a Customer Service Life Cycle. (b) Define the Three (3) B

Managing diversity - combating challenges, Managing diversity is about more...

Managing diversity is about more than equal employment opportunity and affirmative action (Losyk, 1996). The organisation should create such a working environment as will increase

Implement a business process re-engineering strategy, Consider you are a co...

Consider you are a consultant from the company Engineering Experts. One of your clients has contacted you to re-engineer the core process of his company. Explain how you will imple

Knowledge questions, Ask quebriefly describe the institutional environments...

Ask quebriefly describe the institutional environmentstion

Establish an electronic commerce presence selling videos, QUESTION (a) ...

QUESTION (a) You have decided to buy a new laser printer for your office. Write a short summary of the processes/activities that you must undertake to gather information about

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