Internal Rate of Return and Net Present Value
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Internal Rate of Return and Net Present Value
Question Description
1 excel spreadsheet with a 1500-word paper Calculate the investment opportunity’s net present value (NPV), internal rate of return (IRR), and payback based on the following information:
By purchasing the supplier, EEC hopes to save $500,000 each year for the next ten years.
The EEC’s cost of capital is 14%.
EEC believes the supplier can be purchased for $2 million.
Please respond to the following questions:
Should EEC buy the supplier based on your calculations? Why do you think that is?
Which of the methods (NPV, IRR, or payback term) is the most practical? Why?
Which of the following strategies (NPV, IRR, or payback period) is the least useful? Why?
Would your response be the same if the EEC’s cost of capital was 25%? Why do you think that is?
Would your response be the same if EEC failed to save $500,000 each year as planned?
What is the smallest amount of savings required for EEC to be interested in this investment?
In this situation, how much would EEC be willing to pay for the supplier?
If any of the following scenarios are true, write a report to the President of EEC detailing your findings and showing the consequences:
The cost of capital in the EEC rises.
The annual savings are estimated to be less than $500,000.EEC must pay more than $2 million for the supplier
Internal Rate of Return and Net Present Value
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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