Complete the Capital Budgeting Case  Includes an Excel Spreadsheet and a Paper
For your answer to be accepted you must complete the ENTIRE assignment as it is outlined below. This includes a spreadsheet with formulas and a paper.
Capital Budgeting Case
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 = $100,000 in year one, increasing by 10% each year
Expenses = $20,000 in year one, increasing by 15% each year
Depreciation expense = $5,000 each year
Tax rate = 25%
Discount rate = 10%
Corporation B
Revenues = $150,000 in year one, increasing by 8% each year
Expenses = $60,000 in year one, increasing by 10% each year
Depreciation expense = $10,000 each year
Tax rate = 25%
Discount rate = 11%
Compute and analyze items (a) through (d) using a Microsoft Excel spreadsheet. Make sure all calculations can be seen in the background of the applicable spreadsheet cells. In other words, leave an audit trail so others can see how you arrived at your calculations and analysis. Items (a) through (d) should be submitted in Microsoft Excel; indicate your recommendation (e) in the Microsoft Excel spreadsheet; the paper stated in item (f) should be submitted consistent with APA guidelines.
a. A 5year projected income statement
b. A 5year projected cash flow
c. Net present value (NPV)
d. Internal rate of return (IRR)
e. Based on items (a) through (d), which company would you recommend acquiring?
f. Write a paper of no more 1,050 words that defines, analyzes, and interprets the answers to items (c) and (d). Present the rationale behind each item and why it supports your decision stated in item (e). Also, attempt to describe the relationship between NPV and IRR. (Hint. The key factor is the discount rate used.) In addition to the paper, a Micosoft Excel spreadsheet showing your projections and calculations must be shown and attached.
QRB/501 QRB 501 Week 6  Learning Team Assignment  Capital Budgeting Case  A+, work shown, and original!
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xxxxxxx QRB 501 Week x  Learning Team xxxxxxxxxx x Capital xxxxxxxxx Case x xxx xxxx shown, and xxxxxxxxx
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xxx xxx xxxx x Learning xxxx xxxxxxxxxx  xxxxxxx xxxxxxxxx Case xxxxxxxxx
xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx x  Corporation B  
xxxx  1  2  3  4  x  1  x  x  x  5 
xxxxxxxx  xxxxxx  xxxxxx  xxxxxx  xxxxxx  146410.0000000001  xxxxxx  162000  174960  188957  xxxxxx 
Less Expenses  xxxxx  23000  xxxxx  30417  xxxxx  xxxxx  xxxxx  72600  xxxxx  87846 
xxxxxx Before xxxxxxxxxxxx  xxxxx  xxxxx  xxxxx  102683  xxxxxx  xxxxx  96000  102360  109097  116227 
xxxx xxxxxxxxxxxx  xxxx  xxxx  xxxx  5000  xxxx  xxxxx  xxxxx  10000  10000  10000 
Profit Before Taxes  75000  xxxxx  89550  97683  106430  80000  xxxxx  xxxxx  xxxxx  xxxxxx 
Less Taxes  xxxxx  20500  22388  xxxxx  xxxxx  20000  21500  23090  24774  26557 
Net xxxxxx  xxxxx  xxxxx  xxxxx  xxxxx  79822  60000  64500  69270  74323  xxxxx 
Net Income  xxxxx  xxxxx  26450  xxxxx  xxxxx  xxxxx  66000  xxxxx  xxxxx  87846 
Add xxxxxxxxxxxx  0  x  0  0  x  xxxxx  x  0  0  x 
xxxxxxxxx Cash xxxx  20000  23000  xxxxx  30417  34980  xxxxx  66000  72600  xxxxx  xxxxx 
xxxx  Cash flow  PV10%DR  xx  Cash flow  PV11%DR  PV  
x  xxxxxxx  x  xxxxxxx  xxxxxxx  1  xxxxxxx  
x  xxxxx  xxxxxxxxxxxx  xxxxxxxxxxxxxxxx  70000  0.9009009009  xxxxxxxxxxxxxxxx  
x  xxxxx  xxxxxxxxxxx  54958.6776859504  74500  xxxxxxxxxxxx  xxxxxxxxxxxxxxxx  
x  xxxxx  xxxxxxxxxxxx  xxxxxxxxxxxxxxxx  79270  xxxxxxxxxxxx  57961.5407957263  
x  78262  xxxxxxxxxxxx  xxxxxxxxxxxxxxxx  84323  0.6587309741  55546.1719328288  
x  84822  xxxxxxxxxxxx  xxxxxxxxxxxxxxxx  89671  0.5934513281  xxxxxxxxxxxxxxx  
NPV  x 20,979.41  xxx  40252  
xxx  xxxxxx  xxx  16.94%  
Year  xxxx flow  xxxxxxxxxx  xxxx 
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Capital Budgeting Case...A++ solution...
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Capital Budgeting
xxxx
Date
Teacher
xxxxxxxxxx Name
Capital xxxxxxxxxx which is also called "investment appraisal," is the xxxxxxxx process xxxx to xxxxxxxxx xxxxx of xx organization's long xxxx xxxxxxxxxxx xxxx xx xxx machinery, replacement machinery, xxx plants, xxx xxxxxxxxx and xxxxxxxx development projects are worth xxxxxxxxx It xx to xxxxxx xxx xxxxx capital investments xx expenditures. xxx xx xxx xxxxxxx xxxxx of xxxxxxx budgeting investments is xx xxxxxxxx xxx xxxxx xx xxx xxxx xx xxx shareholders.
Many formal xxxxxxx xxx xxxx in capital budgeting, xxxxxxxxx the techniques xx followed:
xxx present xxxxx
Internal rate xx xxxxxx
Payback xxxxxx
Profitability xxxxx
Equivalent annuity
xxxx options xxxxxxxx
Net Present Value
Net present value (NPV) xx xxxx to xxxxxxxx xxxx xxxxxxxxx project's value xx xxxxx x xxxxxxxxxx cash xxxx (DCF) valuation. This valuation requires estimating the xxxx and timing xx xxx xxx incremental xxxx xxxxx from xxx xxxxxxxx The NPV is greatly xxxxxxxx
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xxxxxx
xxxxxxxxxxxxxxxxxx xxxxxxxxx Case 
Your company xx thinking about xxxxxxxxx xxxxxxx corporation. You xxxx two choices—the cost of xxxx xxxxxx xx xxxxxxxxx xxx cannot xxxxx more xxxx that, xx acquiring both corporations is not xx option. xxx xxxxxxxxx xxx xxxx critical data: 
Corporation x 
xxxxxxxx = xxxxxxxx xx xxxx one, increasing xx xxx xxxx xxxx 
Expenses x xxxxxxx in year xxxx increasing xx 15% each year 
xxxxxxxxxxxx xxxxxxx = xxxxxx xxxx xxxx 
Tax xxxx = xxx 
xxxxxxxx xxxx = xxx 
Corporation x 
xxxxxxxx = $150,000 xx year one, increasing xx xx xxxx xxxx 
Expenses = $60,000 xx year one, increasing by xxx each xxxx 
Depreciation expense = xxxxxxx each xxxx 
xxx rate x 25% 
Discount xxxx = xxx 
Compute xxx xxxxxxx items xxx xxxxxxx xxx xxxxx x xxxxxxxxx® xxxxx® spreadsheet. xxxx xxxx all xxxxxxxxxxxx can be xxxx xx xxx xxxxxxxxxx xx the applicable spreadsheet cells. xx xxxxx xxxxxx leave xx audit trail so others xxx xxx how xxx xxxxxxx xx your calculations xxx analysis. xxxxx xxx 
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"Capital Budgeting Corporations A & B Case Paper & Solution"...A+ WORK! GOOD LUCK
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xxxx assignment is attached..Thanks xxx xxxxxxxxxx my this assignment!
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xxxxxxxxxxx A
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx A  
xxxxxxxxx xxxxxx xxxxxxxxx  
xxxx  
1  2  3  4  x  
xxxxxxxx  xxxxxxxx  $110,000  xxxxxxxx  xxxxxxxx  xxxxxxxx  
Expenses  $20,000  xxxxxxx  xxxxxxx  xxxxxxx  xxxxxxx  
xxxxxxxxxxxx  xxxxxx  xxxxxx  $5,000  $5,000  $5,000  
xxxx  $75,000  $82,000  $89,550  xxxxxxx  xxxxxxxx  
Taxes  xxxxxxxxxx  xxxxxxxxxx  $22,387.50  $24,420.63  $26,607.47  
xxx xxxxxx  $56,250.00  $61,500.00  xxxxxxxxxx  xxxxxxxxxx  $79,822.41  
xx Operating Cash xxxx  
Year  
0  1  2  x  x  5  
xxxx  $75,000  $82,000  xxxxxxx  xxxxxxx  $106,430  
xxxx xxxxxxxxxxxx  xxxxxx  xxxxxx  xxxxxx  $5,000  xxxxxx  
Less: Taxes  ($18,750.00)  xxxxxxxxxxxx  ($22,387.50)  ($24,420.63)  ($26,607.47)  
Operating Cash xxxx  xxxxxxx  xxxxxxx  $72,163  xxxxxxx  $84,822  
xx Total Projected xxxx xxxxx  
Year  
0  1  2  3  4  5  
xxxxxxx xxxxxx  xxxxxxxxxxxxx  
xxxxxxxxx xxxx Flow  xxxxxxx  xxxxxxx  $72,163  xxxxxxx  xxxxxxx  
Total xxxxxxx xxxx xxxx  xxxxxxxxxxxxx  $61,250.00  xxxxxxxxxx  xxxxxxxxxx  $78,261.88  xxxxxxxxxx 
xx xxx  
Year  
x  x  x  x  x  5  
xxxx Flow  xxxxxxxxxxxxx  $61,250.00  $66,500.00  xxxxxxxxxx  xxxxxxxxxx  $84,822.41 
PV Factor @10%  1  xxxxxx  0.8264  xxxxxx  xxxxxx  0.6209 
xx  xxxxxxxxxxxxx  xxxxxxxxxx  $54,958.68  xxxxxxxxxx  xxxxxxxxxx  xxxxxxxxxx 
xxx  $20,979.20  
xxx  13.05%  
MIRR  xxxxxx  
xx  1.08  
xxxxxxx xxxxxx  
xxxx  xxxx xxxxxxxxxxx Investment  Cash xxxxxx  Ending xxxxxxxxxxx Investment  
0  xxxxxxxx  $0  $250,000  
1  $250,000  $61,250.00  $188,750.00  
2  xxxxxxxx  $66,500.00  $122,250.00  
x  $122,250  xxxxxxxxxx  xxxxxxxxxx  
4  $50,087  xxxxxxxxxx  ($28,174.38)  
xxxxx xxxx xxxxxxx need xx xx recovered xx xxxx xx while the xxxx xxxxxx xx xxxx 4 xx xxxxxxxxxx  
xxxx to xxxxxxxxx the fraction xx year xx we divide $50,088/$78,261.88 x 0.64. xxxxxxxxx xxx payback xxxxxx xx xxxx years  
xxxxxxxxxx xxxxxxx period  
Year  Beg. Unrecovered xxxxxxxxxx  Cash xxxxxx  Ending xxxxxxxxxxx 
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xx a xxxxxxxxxxxxxxxx xxxxx define, analyze, xxx xxxxxxxxx xxx answers xx items (c) through (h). xx xxxx same memo, xxxxxxx the xxxxxxxxx xxxxxx each item and why xx xxxxxxxx your decision stated in xxxx (i). Also, attempt xx describe xxx xxxxxxxxxxxx xxxxxxxxxx xxx and xxxx xxxxxx xxx key factor here is the xxxxxxxx xxxx xxxxxx xx this xxxxx xxxxxxx xxx xxx xxxxx analyze projects differently if xxxx had unequal projected years (i.e., xx xxxxxxxxxxx x xxx x xxxxxx projection and xxxxxxxxxxx B had x xxxxxx projection)
xxxxxx find xxxxx a xxxxxxxx xxxxxxxxxxx xxxxxxxx of both corporations. Based xx xxxx xxxxxxxxx x xxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxxxx x as it mainly has a xxxxxx net xxxxxxx xxxxx than xxxxxxxxxxx A.
xxxxxxxxxxxxx

 Corporation x  Corporation x 
x  NPV  xxxxxxxxxx  xxxxxxxxxx 
d  xxx  xxxxxx  16.94% 
x  Payback xxxxxx  3.64 years  xxx xxxxx 
x  xx  xxxx  1.19 
g  xxxxxxxxxx xxxxxxx xxxxxx  xxx years  xxx xxxxx 
h  xxxx  xxxxxx  13.94% 
xxx xxxxxxx Value
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