Finance Case Study

1.

Identify the sunk costs in this case study. Just tell what they are and how much is each of them in addition to the total of the sunk costs. You do not need to show your calculations for the total as you have already done that in Part 2 on McGraw-Hill Connect.

Also, in your own words, briefly explain what sunk costs are and advise the company on how to handle them. See rubric as well on how you will be graded. 

2.

Should the project be accepted according to payback? Briefly Explain.

[Hint: Answer this question in your own words based on your calculations in Part 2 of the case study. You need to quote the number you had calculated and any other relevant number(s) provided in the case study background information for your comparison and analysis. In other words, you have to compare your calculation result on McGraw-Hill Connect with the given cutoff payback period in order to make your recommendation to the firm whether to accept the project or not.]

3.

Should the project be accepted according to PI? Briefly Explain.

[Hint: Answer this question in your own words based on your calculations in Part 2 of the case study. You need to quote the number you had calculated and any other relevant number for your comparison and analysis. In other words, you have to compare your calculation result on McGraw-Hill Connect with the PI value for project acceptancy in order to make your recommendation to the firm whether to accept the project or not.]

4.

Should the project be accepted according to IRR? Briefly Explain.

[Hint: Answer this question in your own words based on your calculations in Part 2 of the case study. You need to quote the number you had calculated and any other relevant number(s) provided in the case study background information for your comparison and analysis. In other words, you have to compare your calculation result on McGraw-Hill Connect with the given required return in order to make your recommendation to the firm whether to accept the project or not.]

5.

Should the project be accepted according to NPV? Briefly Explain.

[Hint: Answer this question in your own words based on your calculations in Part 2 of the case study. You need to quote the number you had calculated and any other relevant number for your comparison and analysis. In other words, you have to compare your calculation result on McGraw-Hill Connect with the NPV value for project acceptancy in order to make your recommendation to the firm whether to accept the project or not. In addition, you have to tell if your calculated NPV is greater or less than zero. And, you have to specify your calculated NPV as positive if great than 0 or negative if less than 0.]

Case Study Information:

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