2. The Anderson Machine Company's main product is a GPS tracking device that is only one squareinch in size but can be tracked on the internet from nearly any location in the world. Their device isrelatively new and is still working out some problems, but there are no other GPS trackers in theworld that are as small in size as Anderson's device. Investors in Anderson told the company theyexpected to earn a risk-adjusted return of 12% on their investment, and the device has beenprofitable with a 7% return on investment. From a VRIS perspective, which of the following is acorrect description of Anderson's situation? (F&E)The device is valuable, rare, and difficult to copy, but has a lot of substitutes so the company has a temporary competitiveadvantageThe device is valuable but not rare, so the company is experiencing competitive parityO None of these are correctThe device is valuable and rare and a source of competitive advantageThe device is not considered to be valuable and therefore needs to be improved or sold off

In the given case The product is relatively new but not a entire new innovation, there other other…

Answered: 2. The Anderson Machine Company's main…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

3. Howard plc has calculated that a project in which it is investing $500,000 will generate either $150,000 in the best case scenario (likelihood 0.75) or $25,000 in the worst case scenario (likelihood 0.25) What is the project’s expected return for risk evaluation purposes ? 35.00% 23.75% 17.50% 11.25% 4. Davise Ltd is a young company which develops apps for a huge variety of clients. The work performed by Davise Ltd is complicated and its external environment is both complex and dynamic. A large number of its employees are directly involved inbuilding the apps. Activities are largely co-ordinated by informal communication and self-government. Davise Ltd has few managers and most employees report to more than one manager as they work on multiple apps for multiple clients. Which of the following types of organizational structure does Davise Ltd have ? Professional burreaucracy Simple Adhocracy Machine bureaucracy
You are considering an investment opportunity that requires an initial investment of $40 million today. It will generate only one future payment of $75million at the end of two years. The cost of capital is 7%. What is the NPV? [Give your answer in millions of dollars (not in dollars), to one and only one decimal place, and with no dollar sign. For example, 6.2, 18.9 or 47.6. The software will mark it wrong otherwise, so please format your answer properly.]
Your software development company is considering investing in a new mobile app. If it goes viral (10% probability), you expect an NPV of $1,000,000; if it is moderately successful (20% probability), you expect an NPV of $200,000; and if it fails (70% probability), you expect an NPV of $-200,000. What is the expected NPV of the product? Group of answer choices -$100,000. $40,000. $280,000. $333,000. None of the above.
OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $6.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $820,000 per year in direct labor costs. The company requires a 12% return from its investments.1. Compute the proposed investment’s net present value.2. Using your answer from part 1, is the investment’s internal rate of return higher or lower than 12%?
The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is Php 4,120,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. What is the simple payback period for this investment? Use Excel for this problem and pls show a guide thank you
Ash Ketchum has been hired as a financial advisor for Professor Oak. He has to invest $50,000 in a portfolio of two assets. One asset is a safe asset with a fixed return of 10%. The other asset is risky, it has a 35% expected rate of return, but the standard deviation of this return is 15%. Professor Oak wants as high a rate of return as possible while keeping the standard deviation at or below 7%. How much of Professor Oak's money should Ash invest in the safe asset?
Frozen Pizza Co. is considering whether it should allocate funds for research on an instant freeze-dry process for home use. If the research is successful (and the R&D manager feels there is a 75% chance it will be), the firm could market the product at a PhP 4 million profit. However, if the research is unsuccessful, the, firm will incur a PhP 6 million loss. What is the expected monetary value (EMV)of proceeding with the research? *
A computer call center is going to replace all of its incandescent lamps with more energy-efficient fluorescent lighting fixtures. The total energy savings are estimated to be $1,875 per year, and the cost of purchasing and installing the fluorescent fixtures is $4,900. The study period is five years, and terminal market values for the fixtures are negligible. Solve, a. What is the IRR of this investment? b. What is the simple payback period of the investment? c. Is there a conflict in the answers to Parts (a) and (b)?List your assumptions. d. The simple payback “rate of return” is 1/θ. How close does this metric come to matching your answer in Part (a)?
Verizon has spent billions of dollars to upgrade its network from 3G to 4G. But there aren't many 4G compatible devices, coverage is spotty, and most applications don't really need higher speeds. Verizon is hoping that its investment in 4G works out. Based on the potentially slow initial adoption of 4G by customers, how might the conclusions of a cash payback analysis of Verizon's 4G investment differ from a present value analysis?
The U.S. Navy’s robotics lab at Point Loma Naval Base in San Diego is developing robots that will follow a soldier’s command or operate autonomously. If one robot would prevent injury to soldiers or loss of equipment valued at $1.5 million per year, how much could the military afford to spend now on the robot and still recover its investment in 4 years at 8% per year?
Your latest project involves the development of a death ray. Initial estimates predict that the project has a 50% chance of failure, with a potential loss of $1,000,000. However, you could hire an expert for $450,000. This is likely to reduce the chance of failure to 20% and the potential loss to $300,000. Questions: a) What is the dollar value of the net benefit of hiring the expert? Should you hire the expert? (Show all calculations for credit) b) As the skeptical accountant, do you have any concerns with this analysis? Be specific in order to receive credit
Aliska plc is investing £990,000 in a project. If it is a success then the return will be £230,000. However, if a particular risk occurs the return will reduce to £10,000. The probability of this risk occurring is 02 What is the project's expected return on the investment for risk evaluation purposes? A. 4.85% B. 5.45% C. 18.79% D. 19.39%

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS