Road King Trucks Assignment Example | Topics and Well Written Essays - 1750 words

Road King Trucks - Assignment Example Road King Trucks should accept the project as it has a positive NPV and a low payback period. In addition, the company’s IRR  is higher  than the  Road King Trucks  cost of capital. Further, the company has a Profitability Index, PI, of greater than one implying that it has a higher per dollar return. Road King Trucks is going to gain $532 million in wealth when the expansion decision implemented, which is a huge amount money on a scale like this. Road King Trucks has a bond rating of AA. This makes its risk relatively low (Groppelli & Nikbakht, (2006). For these reasons, the company should definitely say yes to the expansion decision. Road King Trucks, Inc. that is a company that manufactures trucks is contemplating on introducing a public transport bus. A recently hired, CEO Michael Livingston organized a meeting with the company’s top engineers and managers to examine introducing into its existing product line a large, public transit bus (Bidgoli, 2004). The new CEO Michael Livingston recognized the opportunity of building these public transit buses due to the escalating  prices of fuel, the  roads  congestion  together with  the ever increasing parking fees. It is likely that more people are going to use public transportation because the prices of oil keep on rising with no sign of decreasing in the near future. As a result, the public transportations demand is expected to increase and continue into the spring as many people will search for alternative transportation. Road King Trucks should, therefore, adapts itself to the market changes in order to be at the forefront of their field of business (Groppelli & Nikbakht, (2006). The company should go Green by adopting engines that demonstrate immense environmental consciousness to the world (Baker & Powell, 2005). This will attract people that require public transportation thus fulfilling their needs or demands.