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DISAGREEMENT IN THE EXECUTIVE SUITE You are a highly paid financial consultant and asked to help Maximum Drive Corporation with their finance strategy and you are called to a meeting with them in their new headquarters. The Maximum Drive executive team tells you they have an important decision to make in regards to possible technology investment projects. Usually the executives are in a good mood but this time when you enter the room it feels cold and no one is smiling. They ask you to evaluate and rank each of these possible choices and give them advice based on the results and their strategic decision making needs. They have 4 possible investments on the table and want your advice. Each executive member tries to argue their position. The CEO goes first and says they feel the company is tight on cash and worried how long it will take them to get their money back from their investment. The CIO is most interested in which tech investment will be the most rewarding over the long term. The HR says they need to avoid this costly investment and instead focus on the productivity of their current team and keep up morale. You notice in the meeting with you that these executives are crossing their arms, not looking at each other and there is alot of tension in the room. Each investment choice involves a large initial payment of $100,000. Here is the expected cash flow of each investment over the next five years. A B C D Year 1 $10,000 $50,000 $25,000 $ 0 Year 2 $25,000 0 $20,000 $40,000 $30,000 $30,000 Year 3 $25,000 $45,000 Year 4 $40,000 0 $25,000 $55,000 Year 5 $50,000 0 $5,000 $60,000 SOLVE and ANALYZE: 1A Show the CEO, CIO and HR the investment project numbers using NPV (10% discount rate), IRR, Payback periods and/or other finance methods used during this course. (15 marks) 1B. Based on your numbers and calculations, give Maximum Drive Corp your finance advice of what is the best option for them. Can you recommend any any other financial ways they can lower risk and maximize gains based on the individual wants and needs of each executive team member so they are all happy with your advice? (10 marks) DISAGREEMENT IN THE EXECUTIVE SUITE You are a highly paid financial consultant and asked to help Maximum Drive Corporation with their finance strategy and you are called to a meeting with them in their new headquarters. The Maximum Drive executive team tells you they have an important decision to make in regards to possible technology investment projects. Usually the executives are in a good mood but this time when you enter the room it feels cold and no one is smiling. They ask you to evaluate and rank each of these possible choices and give them advice based on the results and their strategic decision making needs. They have 4 possible investments on the table and want your advice. Each executive member tries to argue their position. The CEO goes first and says they feel the company is tight on cash and worried how long it will take them to get their money back from their investment. The CIO is most interested in which tech investment will be the most rewarding over the long term. The HR says they need to avoid this costly investment and instead focus on the productivity of their current team and keep up morale. You notice in the meeting with you that these executives are crossing their arms, not looking at each other and there is alot of tension in the room. Each investment choice involves a large initial payment of $100,000. Here is the expected cash flow of each investment over the next five years. A B C D Year 1 $10,000 $50,000 $25,000 $ 0 Year 2 $25,000 0 $20,000 $40,000 $30,000 $30,000 Year 3 $25,000 $45,000 Year 4 $40,000 0 $25,000 $55,000 Year 5 $50,000 0 $5,000 $60,000 SOLVE and ANALYZE: 1A Show the CEO, CIO and HR the investment project numbers using NPV (10% discount rate), IRR, Payback periods and/or other finance methods used during this course. (15 marks) 1B. Based on your numbers and calculations, give Maximum Drive Corp your finance advice of what is the best option for them. Can you recommend any any other financial ways they can lower risk and maximize gains based on the individual wants and needs of each executive team member so they are all happy with your advice? (10 marks)
