Your company is planning an investment. There are 3 different offers. The board has asked you...

  

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Your company is planning an investment. There are 3 different offers. The board has asked you to analyze financially all alternatives and present them in a report (concise enough for them to understand). All three investments have a life of 5 years, and all have the same capacity, therefore expected retum. Initial investment Yearly operating expenses Scrap value (resale value) Offer A 6,000,000 7,000,000 0 Offer B 30,000,000 2,000,000 10,000,000 Offer C 35,000,000 1,250,000 12,500,000 a. Your CFO hints that your company's discount rate is 10%. Accordingly which offer should be accepted? b. Your CFO again hints that the board members do not understand the NPV concept, rather they are keen on using IRR. Taking into consideration board members age and your limited time, you cannot educate them on the merits of using NPV. How would you structure your presentation? Your company is planning an investment. There are 3 different offers. The board has asked you to analyze financially all alternatives and present them in a report (concise enough for them to understand). All three investments have a life of 5 years, and all have the same capacity, therefore expected retum. Initial investment Yearly operating expenses Scrap value (resale value) Offer A 6,000,000 7,000,000 0 Offer B 30,000,000 2,000,000 10,000,000 Offer C 35,000,000 1,250,000 12,500,000 a. Your CFO hints that your company's discount rate is 10%. Accordingly which offer should be accepted? b. Your CFO again hints that the board members do not understand the NPV concept, rather they are keen on using IRR. Taking into consideration board members age and your limited time, you cannot educate them on the merits of using NPV. How would you structure your presentation?

Answer rating: 100% (QA)

Solution Here is how I would structure the presentation for the board Gentlemen We have three invest... View the full answer