Option NPV of the Cash Flows Initial Investment Year 1 Year 2 Year 3 Year...
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Accounting
Option | NPV of the Cash Flows | Initial Investment | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 |
A | Project A: 25 Employee Facility | -2,000 | -200 | -300 | -400 | 200 | 400 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 |
B | Project B: 40 Employee Facility | -2,500 | -200 | -200 | 100 | 400 | 400 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 |
C | Project C: 75 Employee Facility | -3,000 | -300 | -400 | -100 | 600 | 700 | 2,000 | 2,000 | 2,000 | 2,000 | 2,000 |
D | Equipment 1- Fully Automatic | -1,500 | -100 | 100 | 200 | 400 | 200 | 800 | 800 | 800 | 800 | 800 |
E | Equipment 1- Semi Automatic | -1,000 | -50 | -100 | 200 | 200 | 300 | 600 | 600 | 600 | 600 | 600 |
F | Equipment 1- Manual | -750 | 150 | 150 | 150 | 150 | 150 | 750 | 750 | 750 | 750 | 750 |
G | Equipment 2- Standard | -800 | -175 | 200 | 250 | 250 | 300 | 700 | 700 | 700 | 700 | 700 |
H | Equipment 2- Top of the Line | -1,500 | -100 | 275 | 325 | 325 | 325 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 |
I | Equipment 3- 3-Man Machine | -700 | -200 | -150 | 250 | 350 | 350 | |||||
J | Equipment 3- 2-Man Machine | -600 | -175 | -100 | 175 | 175 | 175 | |||||
K | Equipment - 5-Man Machine | -750 | -300 | -200 | 300 | 400 | 400 |
Construct and recommend between three and five metrics to measure the performance of the new operating strategy. At least one metric should reflect dividend policy as it relates to rewarding shareholders.
Prepare an executive summary describing your recommendations for each project and the overall cost, net cash flows, and expected returns of the operating configuration that you recommend. Be sure to justify your recommendations in terms of the investment criteria applied in Step 3 above. Be sure to report the full cost of the facility as it is configured per your recommendations. Present and justify your operating strategy performance metrics.
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