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:
Answer the following:
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