Cost benefit analysis CanGo

IRR uses all cash flows and incorporates the time value of money. When evaluating independent projects, IRR will always lead to the same decision as NPV. Because IRR assumes that cash flows will be reinvested at the internal rate of return, which is not always or even usually the case, it can rank mutually exclusive projects incorrectly. With certain patterns of cash flows, the IRR equation has more than one solution, which confuses the decision rule. IRR is slightly more

The NPV compares the inflow of cash against the flow of cash to make the investment. With the cash flows occurring over a period of time, NPV also takes into account the cost of capital. The cost of capital or discount rate allows the company to weigh the present value of capital today with the investment capital’s present value. Futronics Inc. investment would have an NPV of $138,642.39. The NPV of this investment would add value to Futronics Inc.’ worth.

1) Incremental cash flows are the cash flows that should be used in calculating the NPV of a project. The cash flows are changes in cash flows that occur as a direct consequence of accepting a project, not the cash flows that the company is already receiving.

Thus, by year three the company will be making a profit off the investment as year three is 86.73 million profit by 55.35 cost giving the company a 31.38 million dollar surplus. Generally, a period of payback of three year or less is acceptable (Reference Entry) causing this project to be viable based off the payback analysis. Although, these calculations are flawed. The reason for this is because the time value of money is not taken into effect when calculating payback periods which is where IRR can further assist in a more realistic financial picture (Reference Entry).

Hello, we are Management Pro Consulting Inc. We a consulting company that was hired to help CanGo improve their business model and effective in the company. We spent many week in CanGo evaluating the many issue with them ranging from order placing to shipping. In the presentation we will explain how CanGo benefit from many key area for improvement and gain better control of the marketplace. At the ended CanGo we have a better hold where they are and where they want to go with some key tools like Competitive analysis, financial analysis, Strategic planning, and SWOT. This are just a few tools that will vast improve CanGo stock value.

CanGo has experienced many financial problems due to poor decision making. For example, in 2009, CanGo used proceeds from IPO, better known as initial public offering, to buy an online gaming company. This was a poor investment based on two reasons. First of all, it can be very difficult to predict how a stock will fare off on its first day of trading versus upcoming days in the future. Second, initial public

A project NPV may be positive if: There are errors in the estimations of the cash flows or required rate of return, or if the firm has a competitive advantage over other firms which cannot be easily overcome.

This analysis is done assuming the benefits accrued in the year 2050. The costs are evaluated from the year 2011 – the proposed time of starting the project, while the benefits are calculated from the year 2020 – the expected time of launching the project. The estimated streams of benefits and costs occurring each year between 2011 and 2050 were discounted to their present value and summarized to calculate the benefit cost ratio.

* The sum of all these present values is the net present value, which equals $8,881.52. Since the NPV is greater than zero, it would be better to invest in the project than to do nothing, and the corporation should invest in this project if there is no mutually exclusive alternative with a higher NPV.

Net present value can help address the time value of money when comparing projects. Each potential project's value should be estimated using a discounted cash flow (DCF) valuation, to find its net present value (NPV). The NPV decision rule asserts that all positive NPV projects should be accepted in an unconstrained environment, or if projects are mutually exclusive, the projects with the highest NPV should be accepted.

A more accurate measure for considering whether or not to accept a project is its net present value. It is not without flaw, as any deviation from forecasted amounts will alter the NPV. NPV assumes that cash flows generated from the project are reinvested at the company's required rate of return, rather than the IRR. This provides a more realistic measure of how a project will affect the firm while providing a dollar amount, rather than an unreliable percentage. In comparing the evaluation methods, we feel NPV is the most appropriate for this case.

The Internal Rate of Return (IRR) is that discount rate providing a net value of zero for a future series of cash flows. The IRR and Net Present Value (NPV) are used to decide between investments to select what investment should provide the most returns.

Internal rate of return (IRR) is a rate of return on an investment. The IRR of an investment is the interest rate that will give it a net present value of zero.

When the value of a cost or benefit is computed in terms of cash today, we refer to it as the present value. The net present value of a project or investment is the difference between the present value of its benefits and the present value of its cost. The NPV expresses the value of an investment decision as an amount of cash received today. As long as the NPV is positive, the decision increases the value of the firm and is a good decision regardless of your current cash needs or preferences regarding when to spend the money. The NPV decision rule implies that we should undertake projects with a positive NPV. Managers only take the good projects, those for which the present value of the benefits exceeds the present value of the costs. The end result, the value of the firm increases and investors are wealthier. Projects with negative NPVs have cost that exceed their benefits. Accepting them is equivalent to losing money.

Internal rate of return (IRR) is the discount rate that makes NPV equal to zero. It is also called the time-adjusted rate of return.