Vanguard is evaluating new potential investments to add to their internal investment fund. Their current...
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Vanguard is evaluating new potential investments to add to their internal investment fund. Their current fund composition boasts returns that, on average, exceed the S&P 500 at 8.5%. They take a conservative approach by allowing capital investments to be recovered within a decade following each purchase. Vanguard is considering adding the Hungarian firm, Kimco & company, a new technology firm developing automation software for the automotive industry, to their fund.
Estimated details regarding the Kimco & Co. investment are as follows:
| Potential investment | Payback period
| Return on investment (ROI) | Net present value (NPV) | Internal rate of Return (IRR) |
| Kimco & co. | 7 years | 0.079 | 0.0 | 0.085 |
As an analyst at Vanguard, would you recommend adding Kimco & co. to their international fund? Please use the capital investment evaluation measures discussed in class to justify your answer.
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