12 Comparison of Capital Budgeting Techniques The Dilemma at Day-Pro The Day-Pro Chemical Corporation‚ established in 1995‚ has managed to earn a consistently high rate of return on its investments. The secret of its success has been the strategic and timely development‚ manufacturing‚ and marketing of innovative products that have been used in various industries. Currently‚ the management of the company is considering the manufacture of a thermosetting resin as packaging material for electronic
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The Dilemma at Day Pro 1. The payback period can be defined as the length of time it takes before the cumulated stream of forecasted cash flows equal the initial investment (Arnold 2007). By looking at Appendicle A1.0 and A1.1 we can see that the "Epoxy Resin" project has a payback period of 1.5 years while Synthetic Resin has a longer payback period of 2.5 years. On the basis of this methodology we will choose to invest in Epoxy Resin. Though it is important to understand
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1. Calculate the Payback Period of each project. Explain what argument Tim should make to show that the Payback Period is not appropriate in this case. Answer : Year Synthetic Resin Epoxy Resin Cash Flows Cumulative Cash Flows Cash Flows Cumulative Cash Flows 0 -$1‚000‚000 -$1‚000‚000 -$800‚000 -$800‚000 1 $350‚000 -$650‚000 $600‚000 -$200‚000 2 $400‚000 -$250‚000 $400‚000 $200‚000 3 $500‚000 $250‚000 $300‚000 $500‚000 4 $650‚000 $900‚000 $200‚000 $700‚000 5 $700‚000 $1‚600‚000 $200‚000
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1. Payback Period of each project Tim can show that the payback period is not appropriate in the analysis of the projects for the following reasons. First‚ it does not properly account for the time value of money‚ risk financing and other important considerations such as opportunity cost and it does not consider the cost of capital. It does not specify any required comparison to other investments or even to not making an investment. The method is an indication of both the risk and the liquidity
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1.) Synthetic Resin PP=2+250‚000500‚000 =2.5 yrs. Epoxy Resin PP=1+200‚000400‚000 =1.5 yrs. ***Tim must explain to the board that Payback Method does not consider the cost of the capital (debt/equity) that the project will undertake which is reflected in the cash flow. It only states the length of time the company will be tied up in the project. He should also emphasize that the PBP method ignores the time value of money as well as the cash flows occuring after the payback period
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We as people face an amounting of moral disagreements every single day. From the basic instinct and intuition‚ we are born with. To the ones we are taught throughout life. The decisions we make based off our moral ethics can shape the rest of our future. In either a positive of negative notion. Gerald Warh a future graduate with a degree in chemical engineering is blinded with vast decisions as his father Hans Warh turns terminally ill. Manger of their family organic farm‚ Hans Warh is no longer
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General Dwight D. Eisenhower‚ supreme commander for the Allied forces during World War II‚ had to make the decision to attack Normandy beaches along side the British. This battle on Normandy is well know by the name D-Day. Eisenhower had to decide whether it was better to postpone until the end of June or go along with the unpredictable weather. The primary component for the attack on Normandy was the unpredictable weather. Another was the choice to leave the boats in position or to bring the ships
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consequence of this voyage. Columbus Day in the United States is a holiday that was celebrated as early as 1905‚ and became an official federal holiday in 1937. Presently the debate has risen on whether this date should be recognized or celebrated‚ with places such as Los Angeles along with other cities moving to replace the second Monday in October to Indigenous Peoples Day. In this paper I will argue why we at Cal Poly Pomona should not “Celebrate” Columbus day‚ but why we should
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educational setting Ethical Dilemmas in teaching Beginning teacher’s worries Ethical Dilemmas in Teaching Ethical Dilemma * Ethical dilemma is a complex situation that often involves an apparent mental conflict between moral imperatives‚ in which to obey one would result in transgressing another. (http://en.wikipedia.org/wiki/Ethical_dilemma) * Conflict between two or more ethical principles/standards. * Also known as moral dilemmas. These are situations in which
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Question #1: Please read Problem 3 at the end of Chapter 17 regarding the lawsuit by alleged thief Mr. Mapp against Gimbels Department Store. Under what theory might Mr. Mapp argue that Gimbels is liable for the assault committed against Mapp by Mr. DiDomenico‚ an employee of J.C. Penney’s? Would Mr. Mapp be successful under the theory you chose? Why or why not? Did the Gimbels security woman allow DiDomenico to assist in her store? Agency theory turns on a few items in a balancing act: (i) who
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