âCapital Budgetingâ Simulation and Mini-CaseNote: 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:Corporation A:Revenues = 100K in year one, increasing by 10% each year.Expenses = 20K in year one, increasing by 15% each year.Depreciation Expense = 5K each year.Tax Rate = 25%Discount Rate = 10%Corporation B:Revenues = 150K in year one, increasing by 8% each year.Expenses = 60K in year one, increasing by 10% each year.Depreciation Expense = 10K each year.Tax Rate = 25%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.a. A 5-year projected income statementb. A 5-year projected cash flowc. Net Present Valued. Internal Rate of Returne. Payback Periodf. Profitability Indexg. Discounted Payback Periodh. Based on items (a) through (g), which company would you recommend acquiring?i. In a 1,050-1,500-word memo, define, analyze, and interpret the answers to items (c) through (g). Present the rationale behind each item and why it supports your decision stated in item (h). 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).j. Based on the scenarios in the âCapital Budgetingâ simulation, pick two key variables whose values are less than certain. Consider different values for these two variables. How different would these values need to be to affect a decision you would make when using them? Given these different values, what other variables could mitigate a decision that might otherwise prove troublesome?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more