skip to Main Content
The smarter way
to do assignments.

Please note that this is just a preview of a school assignment posted on our website by one of our clients. If you need assistance with this question too, please click on the Order button at the bottom of the page to get started.

At the end of 2012 Omega Corporation was considering undertaking a major long-term project in an effort to remain competitive in its industry. The production and sales departments determined the potential annual cash flows savings that could accrue to the firm if it acts soon. Specifically, they estimate that a mixed stream of future cash flow saving will occur at the end of the years 2013 to 2018. The years 2019 to 2023 will see consecutive and equal cash flow savings at the end of each year. The firm estimates that its discount rate over the first six years will be 7%. The expected discount rate over the years 2019 to 2023 will be 11%. The project manager will find the project acceptable if it results in present cash flow saving of at least $860000. The following cash flow savings data are supplied to the finance department for analysis

End of year Cash flow savings ($)
2013 110000
2014 120000
2015 130000
2016 150000
2017 160000
2018 150000
2019 90000
2020 90000
2021 90000
2022 90000
2023 90000

1. Determine the value (at the beginning of 2013) of the cash flow savings expected to be generated by this project.
2. Based solely on one criterion set by the management, should the firm undertake the specific project? Explain.
3. What is the ‘interest rate risk’ and how might it influence the recommendation made in question 2?

GET HELP WITH THIS ASSIGNMENT TODAY

Clicking on this button will take you to our custom assignment page. Here you can fill out all the additional details for this particular paper (grading rubric, academic style, number of sources etc), after which your paper will get assigned to a course-specific writer. If you have any issues/concerns, please don’t hesitate to contact our live support team or email us right away.

How It Works        |        About Us       |       Contact Us

© 2018 | Intelli Essays Homework Service®