You will read the case, analyze it and write a report to the owner, John Davidson, to present your recommendation on the business and investment decision. You may consider the following guided questions to prepare your report. If you have made assumption(s) as part of the case analysis, please include them in the report.
- Using NPV analysis, should Magic Timber and Steel (Magic) purchase the new Delta finishing machine?
- What other quantitative and/or qualitative factors need to be taken in to consideration for the investment decision?
- Sensitivity analysis (e.g. different discount rate, different selling price, change in maintenance cost)
- What would be your recommendation(s)?
- You may assume discount rate as 11% and tax rate at 30%.
What are the requirements?
- A typed report of not more than 4 pages (excluding appendix).
- You may consider including relevant graphs, charts, illustration, tables and reference, if any applicable in the appendix section.
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MagictimberandsteelInvestmentevaluationwithnetpresentvalue.pdf
