2018-10-31T12:38:09+00:00

This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools.

This paper concentrates on the primary theme of This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools. in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 79. For more details and full access to the paper, please refer to the site.

Capital Budgeting Mini-Case

This is an application of capital budgeting that integrates the
projection of a basic cash flow and the computation and analysis of six
capital budgeting tools.
Your company is thinking about acquiring another corporation. You have
two choices; the cost of each choice is $250,000. You cannot spend more
than that, so acquiring both corporations is not an option. The
following are your critical data:
a. Corporation A:
1) Revenues = 100K in year one, increasing by 10% each year.
2) Expenses = 20K in year one, increasing by 15% each year.
3) Depreciation Expense = 5K each year.
4) Tax Rate = 25%
5) Discount Rate = 10%
b. Corporation B:
1) Revenues = 150K in year one, increasing by 8% each year.
2) Expenses = 60K in year one, increasing by 10% each year.
3) Depreciation Expense = 10K each year.
4) Tax Rate = 25%
5) Discount Rate = 11%
You must compute and analyze items (a) through (h) using a Microsoft
Excel spreadsheet. Make sure that all calculations can be seen in the
background of the applicable spreadsheet cells. In other words, leave an
audit trail so that others can see how you arrived at your calculations
and analysis. Items (i), (j), and (k) should be submitted in Microsoft
Word.
c. A 5-year projected income statement
d. A 5-year projected cash flow
e. Net Present Value
f. Internal Rate of Return
g. Payback Period
h. Profitability Index
i. Discounted Payback Period
j. Modified Internal Rate of Return
k. Based on items (a) through (h), which company would you
recommend acquiring?
l. In a 1,050-1,500-word memo, define, analyze, and interpret the
answers to items (c) through (h). Present the rationale behind each item
and why it supports your decision stated in item (i). Also, attempt to
describe the relationship between NPV and IRR. (Hint: The key factor
here is the discount rate used.) In this memo, explain how you would
analyze projects differently if they had unequal projected years (i.e.,
if Corporation A had a 5-year projection and Corporation B had a 7-year
projection).


100% Plagiarism Free & Custom Written,
Tailored to your instructions


International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

UK Registered Company # 11483120


100% Pass Guarantee

Order Now

STILL NOT CONVINCED?

We've produced some samples of what you can expect from our Academic Writing Service - these are created by our writers to show you the kind of high-quality work you'll receive. Take a look for yourself!

View Our Samples

FLAT 25% OFF ON EVERY ORDER.Use "FLAT25" as your promo code during checkout