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Capital Budgeting

The Budgeting Process at Springfield: Change cost measurement for failed budget

Springfield Corporation operates on a calendar-year basis. It begins the annual budgeting process in late August, when the president establishes targets for the total dollar sales and the net income before taxes for the next year. The sales target is given to the Marketing Department, where the marketing manager formulates a sa

Finance: Benson Designs' project; Rank Caradine Corp project's proposed risk

P2. Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $18,250, and the project is expected to yield after-tax cash inflows of $4,000 per year for 7 years. The firm has a 10% cost of capital. a. Determine the net present value (NPV) for the project. b. De

Capital Budgeting Choices

Some capital-budgeting choices require managers to decide between upgrading high-technology research equipment and not upgrading. Respond to the following questions: 1. How would financial managers at a drug manufacturing company use discounted-cash-flow models in their decision-making process? 2. If the equipment is n

Quantitative and Data Management

Can you help me with this assignment? 1) A three-year extended warranty is available for a new vehicle you are purchasing. After researching your make/model, you find that you can expect no significant repair costs in the first two years but repair costs of $1,600 in year three. You could purchase the extended warranty toda

Finance: Project's forecasted NPV; IRR vs NPV; Payback period

See attached file for tables. 1) Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project took place, the Federal Reserve changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By ho

Capital Budgeting Theory on Purchase of New Apple Press

Capital Budgeting Methods Managers make some of the most important decisions during the capital budgeting process. During this process, it is crucial that management use accurate methods to maximize the resources of the organization. Using data from the Anthony's Orchards website, draft a memo to the chief financial office

Brief Summary on the Concept of Capital Budgeting

This is an introduction to Capital Budgeting. It introduces five types of capital budgeting techniques used to evaluate proposed investments. You'll find definitions for Net Present Value(NPV), Internal Rate of Return(IRR), Profitability Index(PI), Payback Period, and Accounting Rate of Return(ARR). This solution will also

Capital budgeting is examined.

Why is a capital budget request always an issue within an organization? How might a manager align those requests with the overall needs of the organization?

Question about Capital Budgeting Process

1. Discuss how an organization would determine the total value to be allocated towards capital projects. 2. Discuss the key factors that would determine if a project should be approved in a capital budgeting process. 3. After a capital project has been approved and completed, discuss how you would assess whether or not the pro

Finance Computations: Example Problems

1) A project costs $100,000 and yields annual cash flows of $40,000 for 5 years. The required rate of return is 6%. Compute the following: a. NPV b. Internal rate of return (IRR) c. Payback period d. Is the project acceptable? Why or why not? 2) What two problems are involved with the payback period?

Determining cost of capital and required rate of return

Please help me work out these questions in Excel. I need to show all work and steps I took to get the answer. Thanks! The Gibson Company is a United States (US) firm that is considering a joint venture with Brasilia, DF, a Brazilian firm that grows and processes coffee beans. Gibson has a patent for a new coffee processing m

Considering a lease versus buying

Considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows: YEAR PROJECT A PROJECT B 0 $100,000 $100,000 1 32,000 0 2 32,000

Three Rivers Company new computer system: Calculate NPV, payback, IRR

Three Rivers Company runs clothing stores in the Pittsburgh area. Three Rivers' management estimates that if it invests $250,000 in a new computer system, it can save $75,000 in annual cash operating costs. The system has an expected useful life of ten years and no terminal disposal value. The required rate of return is 8%. I

Applied Managerial Finance

Superior Living, Inc. is a private, domestic U.S. manufacturer of home furniture targeted at U.S. consumers ages 21 to 54 (from first-time apartment renters to empty nesters). The company generates $250 million in revenues from six product lines: outdoor patio, luxury, durable rental, childrenâ??s furniture, rare woods, and spa

TopCap Co. - net present value of the proposed investment

Chapter 16 Problem 16.26 Problem Description: TopCap Co. is evaluating the purchase of another sewing machine that will be used to manufacture sport caps. The invoice price of the machine is $208,000. In addition, delivery and installation costs will total $10,000. The machine has the

Netflix and Blockbuster Financial Data

Visit the Netflix and Blockbuster Financial Data handout to weigh the benefits of an investment with each company. Consider a scenario where you have $10 million to invest and are considering investing in Netflix or Blockbuster equity (or both). In the context of this investment scenario address the following questions: Dev

New Learning: IRR vs. MIRR Valuation Methods

The paper must (a) identify the main issues in the chosen area, (b) new learning that has occurred, (c) class activities or incidents that facilitated learning and understanding, and (d) specific current and/or future applications and relevance to the workplace. The emphasis of the paper should be on application of

Capital Budgeting Decisions

Evaluate several capital budgeting decision scenarios. In a Word document, complete the exercises below Equity Corp. Equity Corp. paid a consultant to study the desirability of installing some new equipment. The consultant recently submitted the following analysis:

DCF and NPV method

Can you help me get started with this project? Describe how you would use a Discounted Cash Flow and Net Present Value accounting method to make a decision in your business or profession. a. Describe the DCF and NPV methods (what they are and how they can be used) b. Write a short story about a sample company who would

Project cash flow, NPV, IRR

A not for profit business is evaluating the purchase of new diagnostic equipment. The equipment, which costs $600,000, has an expected life of five years and an estimated salvage value of $200,000 at that time. The equipment is expected to be used 15 times a day for 250 days a year for each year for each year of the projects l

Cannondale: Calculate the net present value of product modification.

Cannondale is considering a modification to one of their products. The change will have an immediate cost to Cannondale of $50,000, but is expected to raise revenues by $40,000 next year and $45,000 the year after that. The increase in manufacturing costs due to this change are expected be $5,000 per year. These numbers are

Finance and Budgeting In Education: Virginia Tech Polytechnic Univ

1. Use the Internet to research the current state of the economy and how it is affecting higher education institutions. What evidence can you find that colleges and universities are addressing financial problems through the process of retrenchment? Provide your sources of information. Use examples from your own experience if

CFO at a local hospital - payback, NPV, and IRR

Assume you are the CFO at a local hospital. The CEO has asked you to analyze two proposed capital investments - Project X and Project Y. Each requires a net investment outlay of $10,000 and the opportunity cost of capital for each project is 12%. The projects' expected net cash flows are as follows: Year Pro

Criminal Justice Integration Project and Presentation

Criminal Justice Integration Project and Presentation Identify, describe, and explain the following issues: - Budgets: projected revenue sources and expenditures Include an integration plan to improve interactions between law enforcement, private security, the courts, and institutional and community corrections over t

Finance: Define IRR, payback method, ROI with 6.0% WACC

1. What is meant by a company's "internal rate of return" and why is it important to use as a metric? What do some of the websites ( i.e. Zenwealth, Investopedia and Wikipedia) say about IRR? 2. What are the strengths and weaknesses of the payback method of ranking project proposals as compared to other methods? What method