Sneaker 2013 case study Summarize the problem and discuss the decision faced by the firm Assuming...

Sneaker 2013 case study

Summarize the problem and discuss the decision faced by the firm
Assuming the following cashflows

T	0	1	2	3	4	5	6
CF	(180)	9.5	29.7	37.3	41.8	46.4	146.6
Discount rate	11%

Find Payback period, discounted payback period, NPV, PI, and IRR

What is your final recommendation? Explain in detail.

Expert Solution

Payback period formula = Years before recovery + Cost not covered in that year/ Cash flow for that year
=5+(180-9.5-29.7-37.3-41.80-46.4)/146.60 =5.10 years

Discounted Cash Flow Year 1 =9.5/(1+11%) =8.5586
Discounted Cash Flow Year 2 =29.7/(1+11%)^2 =24.1052
Discounted Cash Flow Year 3 =37.30/(1+11%)^3=27.2734
Discounted Cash Flow Year 4 =41.80/(1+11%)^4=27.5350
Discounted Cash Flow Year 5 =46.40/(1+11%)^5=27.5361
Discounted Cash Flow Year 6 =146.60/(1+11%)^6=78.3783

Discounted Payback Period =5+(180-8.5586-24.1052-27.2734-26.5350-27.5361)/78.3783 =5.84 years

NPV =PV of Cash Flows -Initial Investment =9.5/(1+11%)+29.7/(1+11%)^2+37.3/(1+11%)^3+41.8/(1+11%)^4+46.4/(1+11%)^5+146.6/(1+11%)^6-180 =13.39

PI =1+NPV/Investment =1+13.39/180 =1.07

IRR using financial Calculator
CF0=-180;CF1=9.5;CF2=29.7;CF3=37.30;CF4=41.80;CF5=46.40;CF6=146.60;CPT IRR =12.82%
IRR =12.82%

Based on NPV the project should be accepted. when NPV is positive it adds value to the firm. Hence project should be accepted.

jeff jeffy answered 2 years ago

Sneaker 2013 1- Summarize the problem and discuss the decision faced by the firm 2- Which...

Sneaker 2013 1- Summarize the problem and discuss the decision faced by the firm 2- Which project do you think is riskier? How do you think you should incorporate differences in risk into your analysis? 4- What is your final recommendation? Explain in detail

What would an Executive Summary for this case be? Sneaker 2013 The Situation It was 6:35...

What would an Executive Summary for this case be? Sneaker 2013 The Situation It was 6:35 p.m. on a Friday as Michelle Rodriguez held her head in her hands and sought to regain focus. Her company, New Balance, based in Brighton, Massachusetts, had recently implemented a policy on work-life balance. She had just made the mistake of opening an email from the senior VP of product development, Monte Holliday, who needed a position report by Monday morning on one of...

Create a case study of Operations research in practice by considering a business problem with decision...

Create a case study of Operations research in practice by considering a business problem with decision variables, constraints, and objective function. More real and more interrelated ideas. Solve the problem you created using MS. Excel solver. Solve the problem you created using the simplex method

Based on case study Domino’s Pizza, Inc. – 2013, by Forest R. David Discuss the "internal...

Based on case study Domino’s Pizza, Inc. – 2013, by Forest R. David Discuss the "internal analysis" existing in this case study and evaluate it. Roughly 500words needed

What was the initial ethical dilemma faced by the decision maker in this case? In 2004,...

What was the initial ethical dilemma faced by the decision maker in this case? In 2004, Becton Dickinson, the world’s largest manufac- turer of medical supplies and equipment agreed to pay Retractable, a small innovative company making safety syringes, $100 million dollars for damages it had inflicted on the small manufacturer. The year before, Premier and Novation, two of the largest GPOs (general purchasing organizations that buy supplies for hospitals and clinics), had paid Retractable an undisclosed sum of money...

Case Study # 4: Foreign Markets Entry Decision for a Singaporean Firm What is the nature...

Case Study # 4: Foreign Markets Entry Decision for a Singaporean Firm What is the nature of the product: brand new high technology consisting of a computerized CAD system. The CAD system that this company wants to promote in Pakistan consists of two major parts: the hardware which is a sophisticated weaving machine, and the software that designs the carpets and runs the weaving machine. How important is it to protect patents and the technology from being copied illegally? How...

After reading the case study "Fast Fashion," what is your the decision to a specific problem...

After reading the case study "Fast Fashion," what is your the decision to a specific problem and providing reasons in defense of that decision.

Based on case study Domino’s Pizza, Inc. – 2013, by Forest R. David Discuss how "vision...

Based on case study Domino’s Pizza, Inc. – 2013, by Forest R. David Discuss how "vision and mission analysis" apply in this case study and evaluate it. Roughly 500words needed.

In the Brown et al. (2013): Case Study - Whose Body?

In the Brown et al. (2013): Case Study - Whose Body? (p. 256) by Timothy B. Patrick, Peter J. Tonellato, & Mark A. Hoffman, which perspective presented in the case do you agree with? Are there cases of advances in medical knowledge that do not, at least potentially, threaten to violate the privacy of individual patients? What moral, ethical, and legal protocols can be considered in guiding clinicians in this case? Next, in guiding researchers in this case? This...

Case Study 1. Locate and research a Case Study for Long Term Care Insurance Fraud. Summarize...

Case Study 1. Locate and research a Case Study for Long Term Care Insurance Fraud. Summarize the case study. Which party committed the fraud and explain with specific facts why it may or may not have been fraudulent? Describe the consequences either party endured due to the fraudulent act. You can start your research using the following websites: http://www.irs.gov http://library.cw.edu/ The report should be of 2 pages and submit your document in a Word format.

Question