ACCT614 Colorado Technical Wk 8 EEC Net Present Value and IRR Worksheet
Homework 8
Deliverable Length:
1 Excel spreadsheet and 1 paper of 1,500-2,000 words
Points Possible:
75
Description:
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.
EECs cost of capital is 14%.
EEC believes it can purchase the supplier for $2 million./
Excel worksheet for these calculations are under learning materials for Homework 08.
Answer the following:
Based on your calculations, should EEC acquire the supplier? Why or why not?
Which of the techniques (NPV, IRR, or payback period) is the most useful tool to use? Why?
Which of the techniques (NPV, IRR, or payback period) is the least useful tool to use? Why?
Would your answer be the same if EECs cost of capital were 25%? Why or 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?
Homework 9
Deliverable Length:
Paper length 400-600 words NO SLIDES
Points Possible:
75
Description:
Part 1
Your boss recently attended an accounting seminar at which the balanced scorecard was discussed. He has asked you to prepare a presentation for the next managers meeting about the balanced scorecard and how EEC might adopt it. In your presentation, you should complete the following:
Define the elements that might be presented in a balanced scorecard.
Explain how the elements will be used.
Make a recommendation of whether or not EEC should adopt the balanced scorecard.
If adopted, how might it improve the company?
Part 2
The President of EEC realizes that the balanced scorecard translates an organizations mission and strategy into operational objectives and performance measures. You received an e-mail from him asking you to include information in the PowerPoint presentation about tying compensation to performance measures. Discuss the following:
Describe unethical behavior that can result if the wrong performance measures are used to tie performance measures to compensation.
How can EEC avoid these behaviors?
How should EEC tie performance measures to compensation?
Who is responsible for establishing the performance measures?
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