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You are a financial analyst for the Ajax Company, which uses about $1 million of inventory per month. The purchasing manager has come to you for help with a buying decision. He can get a big discount on $15 million of inventory by buying it all at once. However, there is some risk of obsolescence when buying that far in advance. He understands that large purchases are frequently analyzed by means of capital budgeting techniques, and asks for your help in deciding whether or not to buy the specially priced inventory. How would you advise him? Is capital budgeting appropriate?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91793273

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