Decision on Whether to Purchase the Apple Press or NotAnthony’s OrchardMemorandumTo: Elias Demetriades Chief Financial OfficerFrom:Date: September 13, 2015Subject: Decision on whether to purchase the apple press or nowThe importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.It is therefore imperative that we use accurate methods to maximize the resources of the organization. In terms of capital budgeting, available tools to us include net present value (NPV) analysis, internal rate of return (IRR), payback, and accounting rate of return (ARR) among others.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
The importance of capital budgeting can never be underscored enough in organizations more so in Anthony’s Orchard where maintaining overall company competitiveness is paramount amidst restricted availability of funds for capital projects.
In this regard, these tools were used to evaluate the proposed purchase of the apple press. Please see below for the analysis:YearNet incomeDepreciationCash flowsPV FactorNPV2012($950,000) 1.0000 ($950,000)2013$95,000 $135,714 $230,714 0.9091 $209,740 2014$95,000 $135,714 $230,714 0.8264 $190,673 2015$95,000 $135,714 $230,714 0.7513 $173,339 2016$95,000 $135,714 $230,714 0.6830 $157,581 2017$95,000 $135,714 $230,714 0.6209 $143,255 2018$95,000 $135,714 $230,714 0.5645 $130,232 2019$95,000 $135,714 $230,714 0.5132 $118,393 NPV$173,214