Explore BrainMass

Explore BrainMass

    Capital Budgeting e-Activity

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Based on the e-Activity, if your superior negated your analysis and chose Project B due to payback period, explain how you would justify the financial implications in choosing Project A.

    2. Based on the e-Activity and your response above, revise Project B so as to make it an acceptable alternative to Project A.

    (In your justification, explain why you think Project A would be a better choice than Project B. Explain the details related to the critical acceptance level and payback period). (Please reply in 100 words or more for each question)

    3. Using the e-Activity and your response to Discussion 1, revise Project B as an alternative approach to using the payback period of Project A. In the discussion, please explain front loading a project, Payback Period, IRR, and NPV for each.

    Please break out the answers as follows:

    Project A Project B
    Payback Period X years X years
    Internal Rate of Return x% x%
    Net Present Value $ $

    Part I: http://www.youtube.com/watch?v=Pq67NLTCaa0&feature=related (6 min 43 s)
    Part II: http://www.youtube.com/watch?v=NcyuOTQV5Jc&feature=related (6 min 20 s)
    Part III: http://www.youtube.com/watch?v=1iwmcJCVu9I&feature=related (5 min 8 s)
    Part IV: http://www.youtube.com/watch?v=q_tfPX9u8w4&feature=related (6 min 31 s)

    Thank you! I appreciate your assistance!

    © BrainMass Inc. brainmass.com June 4, 2020, 3:21 am ad1c9bdddf
    https://brainmass.com/business/net-present-value/capital-budgeting-activity-511129

    Solution Preview

    1. Project A has payback period of 1.75 years and Project B has payback period of 3.75 years. So going by the concept of payback period we should choose project A as it has early payback. Project A has outflow of $200,000 while project B has outflow of $400,000. Project A has maximum inflow of $120,000 in the first year itself. Hence, benefits are received early in the life of project which is more in real terms than same benefits which are given by project B in distant ...

    Solution Summary

    The expert examines capital budgeting and e activity.

    $2.19

    ADVERTISEMENT