Crispy Waff

Explain, using your own words, why net present value is generally considered to be a better appraisal test than the internal rate of return.

MK Wafflemakers (MKW) is assessing an investment decision. It is considering launching a new product: the Crispy Waff. The project is based on market research undertaken at a cost of £200,000. The initial investment required is £30M. This attracts capital allowances in equal amounts over 4 years. The company’s depreciation policy is to depreciate such […]

Design a spreadsheet model to assess this project. Your spreadsheet should be designed in a way that allows variables to be easily changed in order to facilitate sensitivity analysis. Using this model, find the net present value, the internal rate of return and the payback period in years and months.

MK Wafflemakers (MKW) is assessing an investment decision. It is considering launching a new product: the Crispy Waff. The project is based on market research undertaken at a cost of £200,000. The initial investment required is £30M. This attracts capital allowances in equal amounts over 4 years. The company’s depreciation policy is to depreciate such […]

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