Question;The purchasing department has found an excellent global;positioning system circuit card in Germany that can provide your firm;with a competitive advantage in the marketplace. Delivery of the circuit cards;is 6 months from date of order. The German firm has offered your firm a 2.5%;discount on the ?3.5 million purchase if paid up front at the time of order;otherwise, the full ?3.5 million will be payable in 6 months before delivery;providing that inflation in Germany does not exceed 1.0% for the year. If;inflation exceeds 1.0% for the year, the rate of inflation would be added to;the ?3.5 million. Find out how inflation has been affected after the European;Union trade agreement and introduction of the euro. Is inflation likely to;increase? Why or why not?;Your supervisor has asked for a recommendation on how;Navigation Systems, Inc. should handle the payment and the probable cost of;each scenario. You know that your firm's weighted average cost of capital is;9%. Assume that a going concern business will, at a minimum, recover the WACC;to achieve at least a breakeven financial position. Therefore, any capital the;firm has will generate at least the WACC in returns.
Paper#54639 | Written in 18-Jul-2015Price : $22