Response to case study 2
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Therefore, we have an initial investment of 500 and annual future cash flows of 800 for three years. This gives us a net present value of 1507. Because we had to make significant assumptions in our estimation of the discount rate, we should apply a sensitivity test to it. What we find is that even at a discount rate of 20%, which is much too high, the NPV is still over 1000. Therefore, using Skype will save the firm money
There are non-financial considerations, however. These include lack of emergency calling, call security, and sound quality. Because VoiP providers, including Skype, are a bypass to the conventional phone system, they do not typically provide emergency calling services (Schueneman, no date). Thus, the firm will have a more difficult time accessing police or fire services. It must be considered how often such services are needed by the office......
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