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CBD Corporation, a business that is currently operating as the biggest media in the country is currently evaluating two possible TV shows for its primetime. The show is planned to be played from 7:00pm-8:00pm every weekdays. The first option is a reality show that will run for three years and the other is a telenovela that will run for four years. Listed below are the expected cash outflows and cash inflows of both projects. Year 1 2 3 Initial investment Php150,000 Php300,000 Php150,000 Php400,000 4 1. Reality show 2. Inflow 100,000 90,000 120,000 Outflow Inflow 15,000 Telenovela 10,000 10,000 90,000 120,000 100,000 Outflow 130,000 10,000 15,000 20,000 25,000 As the financial adviser of the company, what capital budgeting technique are you going to use in evaluating the two projects? Justify why you would use such method. (10 points) Using the technique that you choose (your answer in number one), which of the two projects will you choose?(10 points) CBD Corporation, a business that is currently operating as the biggest media in the country is currently evaluating two possible TV shows for its primetime. The show is planned to be played from 7:00pm-8:00pm every weekdays. The first option is a reality show that will run for three years and the other is a telenovela that will run for four years. Listed below are the expected cash outflows and cash inflows of both projects. Year 1 2 3 Initial investment Php150,000 Php300,000 Php150,000 Php400,000 4 1. Reality show 2. Inflow 100,000 90,000 120,000 Outflow Inflow 15,000 Telenovela 10,000 10,000 90,000 120,000 100,000 Outflow 130,000 10,000 15,000 20,000 25,000 As the financial adviser of the company, what capital budgeting technique are you going to use in evaluating the two projects? Justify why you would use such method. (10 points) Using the technique that you choose (your answer in number one), which of the two projects will you choose?(10 points)
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Answer rating: 100% (QA)
The capital budget ing technique that I would use in evaluating the two projects is net present valu... View the full answer
Related Book For
Microeconomics
ISBN: 978-1464187025
2nd edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
Posted Date:
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