Decision-Making with Relevant Costs at Nike

• Values:

• Relevant Costs of New Project: $1,000,000
• Expected Annual Cash Inflows: $300,000
• Project Life: 5 years
• Discount Rate: 12%
• Requirements:

0. Calculate the net present value (NPV) of the new project for Nike.
1. Determine the payback period and accounting rate of return (ARR).
2. Discuss how relevant costs impact decision-making in the retail industry.
3. Recommend whether Nike should undertake the project based on financial analysis.