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Bonnie Road Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2393 | 285 Words (3 Pages) | Arthur I Segel, John H. Vogel, Lisa Strope | Harvard Business School : 813186 |
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It is obvious from the calculations that the NPV and IRR both are negative for the given case for the tenure of five years. Even if Alexander use financing and the projected net cash flows seem feasible for the five years the net impact of the investment is negative and not sufficient for qualifying as the profitable investment in the long run.
Case Analysis for Bonnie Road
Although the calculated IRR is optimum as per the investor’s demanded rate of 10% but in terms of NPV the value is lower as compared to the initial investment therefore the investment is not desirable for the monetary perspective. It might become profitable after some value addition or with a longer pay back period but for the given tenure it is not a profitable investment and the project seems risky from a financial perspective.
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