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Eddison Electronics Company NPV IRR WACC

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Eddison Electronics Company NPV IRR WACC;LEASE PROVIDED ORIGINAL WORK, 1800+ WORDS WITH APA FORMAT and EXCEL SPREADSHEET, AND 3+ REFERENCES;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;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.;Answer the following;Based on your calculations, should EEC acquire the supplier? Why or why not?;Which of the techniques (NPV, IRR, payback period) is the most useful tool;to use? Why?;Which of the techniques (NPV, IRR, 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? 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?;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

 

Paper#78190 | Written in 18-Jul-2015

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