QUESTION 3. The company you work for is losing money and the eccentric owner you...
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Accounting
QUESTION 3. The company you work for is losing money and the eccentric owner you work for has found a frontier science project that could save the company $325,000 each year. The advantages of the project have not been proven and further analysis is still needed. The total amount of the investment is $2,200,000. Noticing this, the Chief Financial Officer (CFO) asks your team of analysts to find an alternative. After consulting your portfolio, you and your team find a project that costs only $250,000. However, there will be no savings along with this project. Nevertheless, the company will experience an incremental profit of $120,000 every year for the next 20 years.
a) How long will it take to pay back this last investment?
b) Which project is the best investment and why?
Your boss is waiting. What would you tell him?
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