EEC expects to save $500,000 per year for the next 10 years by purchasing the supplier.
EEC’s cost of capital is 14%.
EEC believes it can purchase the supplier for $2 million.
In your memo to the VP of Accounting, answer the following questions:
What are the advantageous and disadvantages to each investing method (NPV, IRR, or payback period)?
Which of the methods (NPV, IRR, or payback period) should EEC use, and why?
Would your answer be the same if EEC’s cost of capital were 25%? Why or why not?
Would your answer be the same if EEC did not save $500,000 per year as anticipated?
What would be the least amount of savings that would make this investment attractive to EEC?
Based on your calculations, should EEC acquire the supplier? Why or why not?
Gulliver’s Travels – Writing Prompt
Prompt: Suppose that Gulliver could not return to England. Where do you think he would prefer to live out the rest of his life, in Lilliput or Brobdingnag? Write a two-paragraph analysis in which you determine which country he would choose as his home. Support your ideas with information from the text.
Capital Budgeting Essay Either go to an art gallery in your area, or use the Internet to participate in a virtual tour of an art gallery. In either case, Study the use of the elements, principles and use of colour used to create the art works displayed at the gallery. Think about ways businesses could use these factors more productively. Write a short (300 word) description explaining what could be done and the benefit(s) of doing it.
Digital Technology and our everyday life
Digital Technology and our everyday life.
What role does digital technology play in your life and what impacts do you think it has on you? Can you imagine your life without technology? What are some of the problems with our (over)reliance on technology?
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