Read the case study below regarding capital-budgeting techniques. In a paper of between 750 and 1475 words (3 to 5 pages), address the questions that follow the case study.
Alexander & Sons Company is currently considering the purchase of equipment that produces mugs.
The company has estimated that approximately 11 million mugs would be sold for each of the next 5 years, at the following prices:
The company would hire seven new employees.
All employees would also receive annual benefits making up 20 percent of wages, in addition to an annual $10,000 cost for health benefits for each employee.
It is estimated that:
The company’s discount rate is 10 percent, and the current tax rate of 35 percent is anticipated to remain unchanged. The company uses the straight-line method for depreciation.
Based on the above information, calculate the following items:
Would you recommend the acceptance of this project? Explain your analysis fully, based on the calculations you have made as well data-informed strategic planning principles.
Be sure to:
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