Paul2021-06-28 20:04:252021-06-28 20:04:25homework week 8
1 Excel spreadsheet and 1 paper of 1,500-2,000 words
Based on the following information, calculate net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:
- 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./
Excel worksheet for these calculations are under learning materials for Homework 08.
Answer the following:
- Based on your calculations, should EEC acquire the supplier? Why or why not?
- Which of the techniques (NPV, IRR, or payback period) is the most useful tool to use? Why?
- Which of the techniques (NPV, IRR, or 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 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?
- Given this scenario, what is the most EEC would be willing to pay for the supplier?
Paper length 400-600 words – NO SLIDES
Your boss recently attended an accounting seminar at which the balanced scorecard was discussed. He has asked you to prepare a presentation for the next manager’s meeting about the balanced scorecard and how EEC might adopt it. In your presentation, you should complete the following:
- Define the elements that might be presented in a balanced scorecard.
- Explain how the elements will be used.
- Make a recommendation of whether or not EEC should adopt the balanced scorecard.
- If adopted, how might it improve the company?
The President of EEC realizes that the balanced scorecard translates an organization’s mission and strategy into operational objectives and performance measures. You received an e-mail from him asking you to include information in the PowerPoint presentation about tying compensation to performance measures. Discuss the following:
- Describe unethical behavior that can result if the wrong performance measures are used to tie performance measures to compensation.
- How can EEC avoid these behaviors?
- How should EEC tie performance measures to compensation?
- Who is responsible for establishing the performance measures?