Select one question to analyze. Referring to the three fundamental principles and three precepts of finance below, integ
Posted: Wed Jul 06, 2022 6:44 pm
Select one question to analyze. Referring to the threefundamental principles and three precepts of finance below,integrate a principle, a precept, or both in your response. Inaddition, integrate 1-2 external credible references to supportyour thoughts.
The manager at your firm shows you an analysis he performed of anew production process that he believes will reduce productioncosts and show a slight profit after taking into account the costof operating the new technology. While the marketing managerbelieves the project is of average risk, you believe the newtechnology is riskier than the projects the firm normally investsin. How will this affect your evaluation of the new technology?
2. You win a lottery that pays $5,000 per month for 20 years,starting today. You have the option of taking a lump sum todayinstead of the monthly payments. The lottery people tell you that,if you take the monthly payments, the money you won is expected toearn 7.25% APR, compounded monthly, for the entire 20 years it willbe invested. Given these data, what is the lump sum you wouldexpect to receive today? Discuss the pros and cons of receiving alump sum or monthly payments?
The manager at your firm shows you an analysis he performed of anew production process that he believes will reduce productioncosts and show a slight profit after taking into account the costof operating the new technology. While the marketing managerbelieves the project is of average risk, you believe the newtechnology is riskier than the projects the firm normally investsin. How will this affect your evaluation of the new technology?
2. You win a lottery that pays $5,000 per month for 20 years,starting today. You have the option of taking a lump sum todayinstead of the monthly payments. The lottery people tell you that,if you take the monthly payments, the money you won is expected toearn 7.25% APR, compounded monthly, for the entire 20 years it willbe invested. Given these data, what is the lump sum you wouldexpect to receive today? Discuss the pros and cons of receiving alump sum or monthly payments?