Investment criteria payback

Assignment Help Business Management
Reference no: EM131083752

A company has been offered the following mutually exclusive investment projects:

                                                        Project 1                Project 2

Initial investment                         £400,000               £80,000

Payback                                           6 years                 3 years

Internal rate of return                    9%                          13%

Net present value                     £63,000                     £10,500

(i) Explain why the three investment criteria payback, internal rate of return (IRR) and net present value (NPV) might have given different rankings for the two projects. 

(ii) Explain which of the two projects is the optimal investment project for the company, based on the information given.

Reference no: EM131083752

Questions Cloud

What are goals you have to achieve in order to meet : As a teacher, what are three to five goals you have to achieve in order to meet the needs of students with visual impairments? What are three to five goals you have to achieve in order to meet the needs of students with hearing impairments?
Analysing investment opportunities : Your company has traditionally used the net present value criterion for analysing investment opportunities. It has recently been proposed that it should switch to a shareholder value approach. Discuss the advantages of doing so.
Describe how the watergate events changed american views : Describe how the Watergate events changed American views toward politics and politicians. In your view, how did these events change the press coverage of politicians?
What is the absorbance of the resulting solution at 580 nm : What is the absorbance of the resulting solution at 580 nm in a 2.50-cm cell') See Problem 13-8 for absorptivity data.
Investment criteria payback : (i) Explain why the three investment criteria payback, internal rate of return (IRR) and net present value (NPV) might have given different rankings for the two projects. (ii) Explain which of the two projects is the optimal investment project for ..
Calculate the present worth of the contract : Chevron Corporation currently contracts their dewatering unit operation in their South Korea natural gas plant to Asian Pacific oil. Contract renewal for 10 years will cost $8500 annually for the next 5 years, and SI 10,000 in years 6, 7, 8, and 9 wh..
Derive theoretical absorbance values : Derive theoretical absorbance values (1.00-cm cells) for each solution and plot the data for (a) 345 nm, (b) 370 nm. and (c) 400 nm.
Formal system of investment appraisal : T plc has never had a formal system of investment appraisal. The directors have decided that, in future, managers must submit a formal proposal in respect of all investment projects and each project must have a payback period of five years or less..
Firm current carbon emissions : Firm Current carbon emissions (tons) Cost of reducing emissions by 1 ton ($) A 80 150 B 100 200 C 70 50 a. Firm A will (Click to select) buy 20 emission permits from sell 20 emission permits to buy 40 emission permits from sell 40 emission permits to..

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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