Expert answer:Need accounting help with Acquisitions

Uncategorized

Answer & Explanation:Part 2
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.
EEC’s cost of capital is
14%.
EEC believes it can
purchase the supplier for $2 million.

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 EEC’s 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?

Prepare a memo to the President of EEC that details your
findings and shows the effects if any of the following situations are true:

How it works

Paste your instructions in the instructions box. You can also attach an instructions file
Select the writer category, deadline, education level and review the instructions
Make a payment for the order to be assignment to a writer
Download the paper after the writer uploads it

Will the writer plagiarize my essay?

You will get a plagiarism-free paper and you can get an originality report upon request.

Is this service safe?

All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades

Continue to order Get a quote

Place your order

Type of paper

Academic level

Deadline

Pages (550 words)

Approximate price: $22

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.