The executive VP just e-mailed us with a clear message:
We need to finish evaluating the decision to purchase the equipment for the new project if it is to be kept in-house. The VP of manufacturing identified all of the expected cash flows for the project versus the cost of outsourcing the project to one of its supply chain partners.
Following are those positive and negative cash flows for each of the projects over a 4-year period:
– Assume that BlueJay will have access to a 12% cost of capital for the NPV calculation
– Use the Payback Period method and NPV to calculate and compare the results for Project A and Project B
– Prepare a project summary that details which of the two alternatives you would recommend to the senior
management team and why
The executive VP just e-mailed us with a clear message:
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