One of your managers has requested the purchase of a new capital asset and as part of your analysis you are calculating the present value of the project’s cash flow. Your manager has argued that your analysis is flawed. You believe the manager is trying to manipulate the analysis. You have determined the amount and timing of the project’s cash flow.

Required:

a. Discuss how a manager can increase the project’s present value without substantially altering it.

b. How can a company prevent managers from using such a method to their benefit?

Question

Required:

a.	Discuss how a manager can increase the project’s present value without substantially altering it.

b.	How can a company prevent managers from using such a method to their benefit?

Quizplus · Accepted Answer

The Answer of One of your managers has requested the purchase of a new capital asset and as part of your analysis you are calculating the present value of the project’s cash flow.  Your manager has argued that your analysis is flawed. You believe the manager is trying to manipulate the analysis. You have determined the amount and timing of the project’s cash flow.

Required:

a.	Discuss how a manager can increase the project’s present value without substantially altering it.

b.	How can a company prevent managers from using such a method to their benefit?

One of Your Managers Has Requested the Purchase of a New