Can anyone discuss quantitatively of how you would evaluate these competing projects.
Division A
Increasing the investment in Receivables in hopes of generating additional sales and profit.
The total upfront investment would be $10M, and cash flows from year one to infinity would be 1,700,000 per year
2) Division B
Carrying 45 days of inventories instead of 30 days, in hopes of reducing the cost of lost sales.
This new policy requires a total upfront investment of $10Million, and cash flows from year one to infinity would be 1,500,000 per year.
In both cases the financial projections are reasonable, and both investments are strategically equally relevant to H.
2007-07-24 08:05:09 · 2 answers · asked by Munch_101 1 in Business & Finance ➔ Investing
What is the cost of capital? Do you figure actual cost or opportunity cost?
How are you going to depreciate the capital investment?
Are you indexing inflation for future period calculations?
What is the taxable profit and tax rate?
2007-07-25 05:32:47 · answer #1 · answered by Menehune 7 · 0⤊ 0⤋
What is the cost of capital? Do you figure actual cost or opportunity cost?
How are you going to depreciate the capital investment?
Are you indexing inflation for future period calculations?
What is the taxable profit and tax rate?
2007-07-30 11:31:36 · answer #2 · answered by Kris Z 4 · 0⤊ 0⤋