Internal rates of return , Basic Statistics

A consumer product firm finds that its brand of laundry detergent is losing market share, so it decides that it needs to "freshen" the product. One strategy is to maintain the current detergent formula but to repackage the product. The other strategy involves a complete reformulation of the product in a way that will appeal to environmentally conscious consumers. The firm will pursue one strategy or the other but not both. Cash flows from each proposal appear below, and the firm discounts cash flows at 13%.

Year

Repackage

Reformulate

0

- $3,000,000

- $25,000,000

1

2,000,0000

10,000,000

2

1,250,000

9,000,000

3

500,000

7,000,000

4

250,000

4,000,000

5

250,000

3,500,000

 

(a)   What strategy will you plan to take an appropriate decision?

(b)   Rank these investments based on their pay back periods.

(c)    Rank these investments based on their net present values (NPVs).

(d)   Rank these investments based on their internal rates of return (IRR).

(e)   Do these investment rankings yield mixed signals?

Posted Date: 2/22/2013 5:56:06 AM | Location : United States







Related Discussions:- Internal rates of return , Assignment Help, Ask Question on Internal rates of return , Get Answer, Expert's Help, Internal rates of return Discussions

Write discussion on Internal rates of return
Your posts are moderated
Related Questions
Suppose that cars pass a certain toll booth at an average rate of 10 cars per minute between the hours of 7 a.m. and 9 a.m. The random variable X counts the number of cars that pas

Questions 1.  What would be the appropriate statistical procedure to test the following hypothesis:  "Triglyceride values are a good predictor of weight in obese adults." 2.

Why is interest expense a no operating expense? Attention cost is a no operating cost when it is not part of a business's primary functions. For example, a store's primary func

time series use in indian economy

a)  The US Food and Drug Administration has veto power over the choice of drug names. In 2004, it used this power regularly, rejecting 36% of the names proposed by companies for re

Hierarchical Clustering   Five, two-dimensional data points are shown below: x y -0.43 1.19 -1.66 1.1

customer behaviour in accounting felid of study

Question: (a) Packs of food have weights that are distributed with standard deviation 2.3 g. A random sample of 200 packets is taken. The mean weight of this sample is found t

What is an irrevocable letter of credit? A permanent mail of credit score is a financial instrument used by banks to guarantee a customer's obligations to a supplier. It is perm

Books of original entry Books of original entrance are a record in which the various or many other transactions are initially and formally recorded and serve up as the straight so