Investment Analysis

 

 

 

 

Problem 1
A company is evaluating three possible investments. Following information is provided by the company.
Project A Project B Project C
Investment $200,000 $50,000 $200,000
Salvage value (Residual Value) 0 5,000 10,000
Net cash flows:
Year 1 50,000 25,000 80,000
Year 2 50,000 16,000 50,000
Year 3 50,000 12,000 60,000
Year 4 50,000 9,000 20,000
Year 5 50,000 0 0
Required rate of return 9% 9% 9%
(Assume that the company uses the straight-line depreciation method.)
Using the following 4 methods of assessing these three projects, please advise the company by the
most relevant project to invest in justifying your choice of investment
1) Calculate Payback Period
2) Calculate ARR
3) Calculate NPV
4) Calculate PI
Present value of annuity of $1:
8% 9% 10%
1 0.926 $0.92 0.909
2 1.783 1.759 1.736
3 2.577 2.531 2.487
4 3.312 3.24 3.17
5 3.993 3.89 3.791
6 4.623 4.486 4.355
Present value of $1:
8% 9% 10%
1 0.926 0.917 0.909
2 0.857 0.842 0.826
3 0.794 0.772 0.751
4 0.735 0.708 0.683
5 0.681 0.65 0.621
6 0.63 0.596 0.564

 

 

 

 

 

Sample Solution

If managers want to grow employees and to do something, they can follow the power tactics. Power is related with expert and motivational. Power can inspire in an organization both positively and negatively. In TCC the managers apply power to develop flexible working plan so that employees get motivated and work according to their ease. The management has the power to run the organization according to the company’s objectives. To create a good connection with the employees, managers can positively activity their power. It supports to return the company’s output and revenue. In an organization, different types of power present such as: legitimate power, reward power, expert power, coercive power, and referent power (Markoulli, 2017). All of these powers can be used for an organization not only for favor but also for bad will. Task 2: P2. An evaluation of how content and process theories of motivation and motivational techniques enable effective achievement of goals in an organizational context. An organization achieve their specific target by proper motivation. In business sector 3 types’ motivation present such as content theory, process theory and reinforcement theory (Gladwell, 2017). Content Theories: Content theory describes the positive issues of motivation. It is important on what motivates the individuals. It explains the clarifications of impulses of human needs as well as time and many psychologists strived to describe these needs. There are some theories include in content theory such as Maslow’s hierarchy of needs, McGregor’s Theory X and Y, ERG theory, Herzberg’s Motivational theory, and McClelland’s theory of needs. The main advantages of content theory that it can make employees be positive. Here motivator motivates each employee individually that’s why employee do their work very easily and correctly. For this theory, employees are fulfilled their basic needs (Hall, 2017).

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