Question
Billy Joe RopeADope Inc. is looking at investing in one of two new product launches. These projects involve expanding production in order to launch new
Billy Joe RopeADope Inc. is looking at investing in one of two new product launches. These projects involve expanding production in order to launch new products. The table below are the forecasted cashflows for each of these initiatives.
| Year | Product A | Product B |
| 0 | -27,000 | -72,000 |
| 1 | 16,000 | 30,000 |
| 2 | 16,000 | 30,000 |
| 3 | 3,000 | 15,000 |
| 4 | 3,000 | 200,000 |
| 5 | 1,000 | 5,000 |
Using a 22% discount rate, calculate the NPV, IRR and Payback for each of these initiatives. Which one would you recommend? Your boss is very concerned about short term liquidity and wants you to focus your recommendation on the Payback method. Would this change your recommendation?
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The Technology Procurement Handbook A Practical Guide To Digital Buying
Authors: Sergii Dovgalenko
1st Edition
1789662125, 978-1789662122
