Case Study : Madison And Madison Essay

1730 Words Jun 25th, 2016 7 Pages
Madison Plc. is software company looking for investing in new software and company is having two options to go for which are Madison super and Madison platform. In order to find the best project to go for NPV and IRR will be utilized for making decision on investment proposal. Net present value is an instrument to measure whether investor will achieve target at a given initial investment or not. Moreover, NPV also calculate the adjustment to the initial investment if needed to achieve the goal by assuming all values remain same. IRR stands for internal rate of return which is useful in making judgement on new investment proposals. If there is high IRR on positive NPV is means company is going get high rate of return on new investment. In case of Madison PLC, NPV computation and IRR formulas will be supportive for making decision Table 1 Analyse of Madison super and Madison Platform NPV
• Madison Super Madison Platform
• initial Investment 5500000
• NPV is positive
• Investment is less (difference of 3million)
• NPV of Madison Super is 5,914,359.00 as per
• NPV as per 11 % is positive (7,156,090.00)

• Investment of 8500000
• NPV is positive
• High investment
• NPV of Madison Platform is 6,238,152.00
• NPV as per 10% is also positive (7,038,070.00) but less than Madison super

Table 2 Analysis of IRR of Madison Super and Madison Platform
Madison Super Madison Platform

• When discount rate (NPV) is 14%
• IRR is 31% of Madison super
• When discount rate…

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