CASE STUDY ON THE CONCH REPUBLIC ELECTRONICS

Case Study on the Conch Republic Electronics

Case Study on the Conch Republic Electronics

The problem is in-depth capital budgeting. The starting cash at time 0 is the cost of the new equipment that is

Payback Period of the Project:

Payback period is defined as the time required for the recovery of its cost. It mainly emphasizes on the recovering of the costs of investment. The formula for the payback period is defined as the cost of the project divided by the annual cash inflows. The payback period of the project of Conch Republic Electronics is 3

Profitability Index of the project:

Profitability index of the project is defined as the index that identifies the relationship of the cost and the benefits of the particular project by the use of a ratio defined as the present value of the future cash flows divided by the initial investment. The profitability Index of the project is 2.30

Internal Rate of Return:

The internal rate of return is defined as the discounted rate that generates a “0” zero net value for the series of the future cash flows. It is used to find out the profitability of your investments. The internal rate of return for the company is 28.31%

Net Present Value:

Net present value in simple words is a method to decide whether to invest or not in a particular project by looking at its projected cash inflows and outflows. Net present value of the company is $42,386,498.00

Sensitivity to change in price:

The project is considered to be feasible if the NPV is positive. With the change of the price the NPV would be $62,686,498.00. The difference with the changing of price would be $406,000.00

Sensitivity to change in quantity:

The finding of the sensitivity of change in quantity is related to original cash flows. The main dissimilarity is ...