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

Write short note on improving business qualities, Q. Write short note on im...

Q. Write short note on improving business qualities? Ans. One of the strategic business worth of information technology is its role in making major improvements in a company's

Marketing Plan in employee preformance Startegic, I''m kindly asking to mak...

I''m kindly asking to make an assignment against "Marketing Plan in employee performance Strategic" in 2000 words as per first attachment, also I need a Report against the assignme

Electronic surveillance of employees, 1. Explain where an employee can reas...

1. Explain where an employee can reasonably expect to have privacy in the workplace. Employees can reasonably expect to have privacy in the workplace as it pertains to issues su

The importance of effective communication, QUESTION The Importance of ...

QUESTION The Importance of Effective Communication The Building Societies Association (BSA) is the trade association for all the UK's building societies. A building societ

Disadvantage of the corporate form of business organization, The organizati...

The organization that administers the certification programs for Certified Hotel Account Executives and Certified Hotel Technology Professionals is: Answer

Managerial skills(10), what are some of the main best managerial skills

what are some of the main best managerial skills

E-bussness, Assuming that you are running the e-business department of an o...

Assuming that you are running the e-business department of an organization, reference to the elements of the Micro and Macro environments of e-business, how are you going to deal w

Improvement in communication in the workplace-email works, c) Students shou...

c) Students should simplify what they see as an 'improvement' in communication in the workplace. Measures used to judge the competence of communication could include: Speed

Global economic crises, Global Economic Crises                     Th...

Global Economic Crises                     The current economic crisis has affected many countries in Europe as well as many countries in the world over. Micro credit institu

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