You Are to Present a Proposed Capital Investment Project to Your

question 165

Essay

You are to present a proposed capital investment project to your board of directors. The project has
a NPV of $12,000 and an IRR of 12%. The firm's required return is 10%. You are to convey your
proposal to the board in a single paragraph. Write that paragraph here. Remember, your job is to
convince the board to either accept or reject the project, whichever you feel is appropriate given
this information.

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Definitions:

Escalation Of Commitment

This refers to the phenomenon where individuals or organizations continue to invest time, money, or resources into a failing course of action due to the substantial resources already invested, rather than altering or abandoning the course.

Problem No Longer Exists

A situation where previously identified issues have been resolved or are no longer relevant.

Resolved

The state in which a problem, conflict, or difficulty has been solved or dealt with effectively.

Dissolved

Dissolved, in a general context, means to have been disintegrated or dispersed into a liquid to form a solution, or to cease to exist as a distinct entity.