mgmt2023, Business Management

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.

Posted Date: 3/28/2013 4:28:21 PM | Location : Jamaica







Related Discussions:- mgmt2023, Assignment Help, Ask Question on mgmt2023, Get Answer, Expert's Help, mgmt2023 Discussions

Write discussion on mgmt2023
Your posts are moderated
Related Questions
Nicholas Carr suggests that the "technology's potential for differentiating one company from the pack - its strategic potential - inexorably declines as it becomes accessible and a

hi there, I just need an assignment to be ready

Explain about the Industrial Management. Industrial Management: Industrial Management includes guidance, control and leadership or efforts of a group of individuals towa

Ethics, trust and integrity are often challenged in an investment banking job. Look at the sub prime crisis, the near collapse of the mortgage giant, Fannie Mae, and the restatemen

. identify and give out the explanation of different categories of legal system

QUESTION Because non-verbal cues can mean more than spoken words and speak louder than spoken words, mastering non-verbal communication skills at work represents a challenge (G

Organisations strategic position - business model: 1. Briefly, what are the products and/or services, as well as its geographic scope, of your chosen organisation? 2. Using

The main activities in this step are: a. Assess the current state of the organization b. Explain the need for change c. Illustrate the desired state d. Create a commu

What are the types of participation worker? Types of Worker’s Participation are as follows: Worker’s participation into management may take several forms, for example:

Question 1: (a) What do you understand by the term ‘Job Satisfaction'? (b) What are the factors that influence job satisfaction in an organization? (c)How does an organis