Question # 4: Your division is considering two investment projects, each of which requires an upfront expenditure of $15 million. You estimate that the investments will produce the following net cash flows:YearProject AProject B
15,000,00020,000,000
210,000,00010,000,000
320,000,0006,000,000
What are the two projects’ Net Present Values, assuming the cost of capital is 5%?What are the two projects’ Profitability Index, assuming the cost of capital is 5%?Which project or projects should be accepted if they are independent?Which project should be accepted if they are mutually exclusive?
Few Brands engender such intense loyalty as that found in the hearts of Harley- Davidson owners. Long ago, Harley Davidson realized that the best way to create lasting relationships with its customers was to understand them on their own terms. The company spends a great deal of time and money in pursuit of that goal. It wants to know who its customers are, how they think and feel, and why they buy a Harley. That customer-centric strategy has helped build Harley-Davidson into a multibillion–dollar company with the largest company-sponsored owner’s group in the world. Harley-Davidson has learned that it sells much more than motorcycles. The company sells a feeling of independence, individualism, and freedom. These strong emotional connections have made Harley- Davidson ownership much more of a lifestyle than merely a product consumption experience. To support that lifestyle, Harley- Davidson recognizes that its most important marketing tool is the network of individuals who ride Harleys. For this reason, Harley- Davidson engages its customer base through company-sponsored travel adventures, events, and other things, such as clothes and accessories both for riders and those who simply like to associate with the brand
April 3, 2015
5:21 am
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