### Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"
ORDER NOW

# Investment decision discussion – Calculate the pros and cons

1Excelspread sheet;1,7502000 words
Details:

Weekly tasks or assignments (Individual or Group Projects) will be due ;by ;Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.

The President of EEC recently called a meeting to announce that one of the firm’s largest suppliers of component parts has approached EEC about a possible purchase of the supplier. The President has requested that you and your staff analyze the feasibility of acquiring this supplier. Based on the following information, calculate net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:

### Need assignment help for this question?

If you need assistance with writing your essay, we are ready to help you!

## OUR PROCESS

### Delivery

Why Choose Us: Cost-efficiency, Plagiarism free, Money Back Guarantee, On-time Delivery, Total Сonfidentiality, 24/7 Support, 100% originality

• 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.

Answer the following:

• Based on your calculations, should EEC acquire the supplier? Why or why not?
• Which of the techniques (NPV, IRR, payback period) is the most useful tool to use? Why?
• Which of the techniques (NPV, IRR, payback period) is the least useful tool to use? Why?
• Would your answer be the same if EEC’s cost of capital were 25%? Why? 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?
• Given this scenario, what is the most EEC would be willing to pay for the supplier?

Prepare a memo to the President of EEC detailing your findings and showing the effects if:

(a) EEC’s cost of capital increases ;
(b) the expected savings are less than \$500,000 per year ;
(c) EEC must pay more than \$2 million for the supplier