Capital Budgeting of Wal-Mart
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Every company has capital projects. Find one new acquisition your company needs.
Once you have identified the new possible investment item, what problems are you going to have in estimating the cash flow that might be emanating from the initial investment and problems in getting it funded? Issues might be:
Risk
Cost
Politics (getting it through committees)
Public Relations
etc.,
Identify a potential capital project for Wal-Mart company describe such a project and write a short summary of the problems you see in getting the funding to see it through.
Assignment Expectations:
The paper should have references to the background materials or other sources you found for this paper. It must discuss both the estimates of the initial investments and the annual incremental after-tax cash flow that is expected to emanate from the investment.
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Assignment Expectations:
The paper should have references to the background materials or other sources you found for this paper. It must discuss both the estimates of the initial investments and the annual incremental after-tax cash flow that is expected to emanate from the investment.
 
The name of the organization is Wal-Mart. It is the biggest retail chain in world having turnover of more than $400 billion. I am considering the capital budgeting decision for the Wal-Mart. Capital budgeting involves taking decisions about the long term assets mix of the organization. For understanding this in detail, let us know the basic capital budgeting steps (financingcp, 2009):
1) Identify potential projects
2) Evaluate and compare projects
For this one has to do the technical, organizational, regulatory, and financial evaluation
3) Select project(s) to implement
Financial evaluation and comparison of the project:
As per financingcp, the required rate of return has 3 elements:
a) Basic return - pure compensation for deferring consumption
b) any 'risk premium' for that project's risk
c) any expected fall in the value of money over time through inflation
Hence different projects having different risk levels should have different discount rate. This is because of difference in risk premium as discussed above. For example project rate adjusted upward as the investment becomes riskier. By increasing the discount rate from 10% to 18%, the net present value of the project will be lower. (Answer, 2009)
Similarly if the project is having lower rate than the discount rate can be reduced from 10% to 6% which will give higher net present value.
Description of New Project by Wal-Mart
I am considering the expansion of Wal-Mart in India. In fact they have tied ...
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