1
Managerial Economic Business Week
3 Students Name
Instructor name
Course
Institution
Date
This study source was downloaded by 100000858663287 from CourseHero.com on 12-23-2022 13:17:23 GMT -06:00
https://www.coursehero.com/file/135795599/Managerial-Economic-Of-Business-Wk-3editeddocx/
, MANAGERIAL ECONOMIC BUSINESS WEEK 2
Question 1: How would a financial consultant advise Sam decide on selecting among the
alternatives?
A financial consultant can advise Sam to adopt the net present value analysis in determining the
best alternative. The difference between the present value of cash inflows and the present value
of cash outflows is the Net Present Value (NPV) (Nwogugu, 2016). The Net present value
determines the profitability analysis of the projected investment or project. Budgeting and
investment planning are achieved through Net present Value.
Question 2: What data would Sam need to make a rational decision?
The assumption is that the decision-maker has full or perfect information about alternatives
through the model of rational decision-making. The other assumption is that they have the
resources and time to evaluate each choice against others (Shu-Hsien Liao et al., 2011). It also
assumes that they have the cognitive ability. Sam needs to analyze the period or duration of each
alternative with their cash flows and the firm's cost of capital.
Question 3: Share with us a spreadsheet Sam creates to compare the choices (provide
details).
Sam is convinced that Lawn Techs would be successful by finding a balance between chemical
and organic approaches. Assuming Sam's alternatives are projects A and B, he would use them to
calculate the NPV for each project.
Project A (chemical approach) in two years with cash flows of $ 1,000 and $3,000
Project B (Organic approach) in two years with cash flows of $ 5,000 and $4,000 each year.
This study source was downloaded by 100000858663287 from CourseHero.com on 12-23-2022 13:17:23 GMT -
https://www.coursehero.com/file/135795599/Managerial-Economic-Of-Business-Wk-
Managerial Economic Business Week
3 Students Name
Instructor name
Course
Institution
Date
This study source was downloaded by 100000858663287 from CourseHero.com on 12-23-2022 13:17:23 GMT -06:00
https://www.coursehero.com/file/135795599/Managerial-Economic-Of-Business-Wk-3editeddocx/
, MANAGERIAL ECONOMIC BUSINESS WEEK 2
Question 1: How would a financial consultant advise Sam decide on selecting among the
alternatives?
A financial consultant can advise Sam to adopt the net present value analysis in determining the
best alternative. The difference between the present value of cash inflows and the present value
of cash outflows is the Net Present Value (NPV) (Nwogugu, 2016). The Net present value
determines the profitability analysis of the projected investment or project. Budgeting and
investment planning are achieved through Net present Value.
Question 2: What data would Sam need to make a rational decision?
The assumption is that the decision-maker has full or perfect information about alternatives
through the model of rational decision-making. The other assumption is that they have the
resources and time to evaluate each choice against others (Shu-Hsien Liao et al., 2011). It also
assumes that they have the cognitive ability. Sam needs to analyze the period or duration of each
alternative with their cash flows and the firm's cost of capital.
Question 3: Share with us a spreadsheet Sam creates to compare the choices (provide
details).
Sam is convinced that Lawn Techs would be successful by finding a balance between chemical
and organic approaches. Assuming Sam's alternatives are projects A and B, he would use them to
calculate the NPV for each project.
Project A (chemical approach) in two years with cash flows of $ 1,000 and $3,000
Project B (Organic approach) in two years with cash flows of $ 5,000 and $4,000 each year.
This study source was downloaded by 100000858663287 from CourseHero.com on 12-23-2022 13:17:23 GMT -
https://www.coursehero.com/file/135795599/Managerial-Economic-Of-Business-Wk-
