a) Compute the net cash inflow anticipated from sale of device for each year over the next 12

years.
(20 marks)
b) Determine the net present value (NPV) of the proposed investment. Would you recommend
that Smart Electronics accepts the device as a new product? Evaluate the consequences of the
profitability for the division if the project should be adopted or not.
[Note: all relevant calculations need to be submitted to support this part of the answer and you
should clearly state any assumptions you make]
(30 marks)
c) Drawing on your answers (in a and b) and the module’s required readings;
Critically evaluate, from the top management perspective how Return on Investment (ROI) can
be used both to define future strategic options and measure managerial performances within
the organization.
[Note: indicate possible intended and unintended consequences for divisions and the firm as a
whole.]
(30 marks)
d) Drawing on your answers (in a, b and c) and module’s required readings [especially Chandler
(1977) and Hoskin et al. (2006) and Drury (2012)] make recommendations to the board of
directors of Smart Electronics Plc. as to how they should respond to shareholders’ request for
better profitability next year. You should also consider the investment figures suggested by the
Mobile devices division and the potential motivational impact on the division manager.