Help on decision analysis question

Nov 1st, 2015
DreamIt
Category:
Business & Finance
Price: $10 USD

Question description

2.  You are the CEO of Cardinal Company (a small handheld technology firm) and have just been briefed on a promising new product with projected cash flows detailed below.  Discuss your assessment of this project’s viability and profitability.  Explain the principles of evaluating cash inflows and outflows. Calculate payback period, total return on investment, internal rate of return, and net present value.  State any assumptions (i.e. discount rate).  Explain your reasoning behind those assumptions.

Year

Revenue

Capital Expenditures

2011

-

$16,000,000

2012

$2,000,000

2013

$5,000,000

2014

$6,500,000

2015

$7,500,000

$5,500,000

2016

$8,000,000

2017

$8,000,000

$1,500,000

2018

$8,500,000

2019

$9,000,000

$3,000,000

2020

$9,500,000

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