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.
Capital Budgeting Case...A++ solution...
body preview (3 words)
xx
xx
xx
file1.docx preview (732 words)
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
   more text follows   
file2.xlsx preview (565 words)
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 
   more text follows   
Try it before you buy it 
"Capital Budgeting Corporations A & B Case Paper & Solution"...A+ WORK! GOOD LUCK
body preview (10 words)
xxxx assignment is attached..Thanks xxx xxxxxxxxxx my this assignment!
file1.xls preview (505 words)
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 
   more text follows   
file2.doc preview (1079 words)
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
   more text follows   
Try it before you buy it 
original paper and excel analysis for your assignment
body preview (0 words)
file1.xls preview (502 words)
xxxxxxxxxxx x
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxCorporation x  
xxxxxxxxx Income Statement  
xxxx  
x  2  3  x  5  
xxxxxxxx  $100,000  $110,000  $121,000  $133,100  $146,410  
Expenses  xxxxxxx  $23,000  xxxxxxx  xxxxxxx  xxxxxxx  
Depreciation  xxxxxx  $5,000  xxxxxx  $5,000  xxxxxx  
EBIT  xxxxxxx  $82,000  $89,550  $97,683  xxxxxxxx  
Taxes  $18,750.00  $20,500.00  xxxxxxxxxx  $24,420.63  $26,607.47  
Net xxxxxx  $56,250.00  $61,500.00  xxxxxxxxxx  $73,261.88  $79,822.41  
1) xxxxxxxxx Cash Flow  
Year  
x  1  x  x  4  x  
xxxx  $75,000  $82,000  xxxxxxx  xxxxxxx  xxxxxxxx  
Add: Depreciation  $5,000  $5,000  $5,000  $5,000  $5,000  
xxxxx xxxxx  xxxxxxxxxxxx  ($20,500.00)  xxxxxxxxxxxx  ($24,420.63)  ($26,607.47)  
Operating Cash xxxx  $61,250  xxxxxxx  $72,163  $78,262  $84,822  
2) Total Projected xxxx xxxxx  
xxxx  
0  x  2  3  x  5  
Initial Outlay  ($250,000.00)  
xxxxxxxxx xxxx Flow  $61,250  $66,500  $72,163  $78,262  xxxxxxx  
Total xxxxxxx Cash Flow  xxxxxxxxxxxxx  $61,250.00  xxxxxxxxxx  xxxxxxxxxx  $78,261.88  xxxxxxxxxx 
xx xxx  
Year  
0  1  2  x  x  x  
xxxx Flow  xxxxxxxxxxxxx  xxxxxxxxxx  xxxxxxxxxx  $72,162.50  $78,261.88  xxxxxxxxxx 
PV xxxxxx @10%  x  0.9091  xxxxxx  0.7513  xxxxxx  xxxxxx 
xx  xxxxxxxxxxxxx  $55,681.82  xxxxxxxxxx  $54,216.75  xxxxxxxxxx  $52,668.04 
NPV  $20,979.20  
xxx  13.05%  
MIRR  11.79%  
PI  1.08  
xxxxxxx period  
Year  Beg. Unrecovered xxxxxxxxxx  Cash xxxxxx  xxxxxx Unrecovered Investment  
x  xxxxxxxx  $0  $250,000  
x  $250,000  xxxxxxxxxx  xxxxxxxxxxx  
x  $188,750  xxxxxxxxxx  xxxxxxxxxxx  
3  xxxxxxxx  xxxxxxxxxx  $50,087.50  
x  $50,087  xxxxxxxxxx  ($28,174.38)  
xxxxx only $50,088 need to xx xxxxxxxxx xx year xx xxxxx the cash inflow xx xxxx x xx xxxxxxxxxx  
xxxx to xxxxxxxxx xxx xxxxxxxx xx year 4, we xxxxxx xxxxxxxxxxxxxxxxxx x 0.64. xxxxxxxxx the xxxxxxx xxxxxx xx 3.64 xxxxx  
Discounted xxxxxxx period  
xxxx  xxxx xxxxxxxxxxx Investment  xxxx xxxxxx  xxxxxx xxxxxxxxxxx 
   more text follows   
file2.doc preview (978 words)
xxxxxx xxxx underneath a detailed comparative xxxxxxxx xx both corporations. I xxxxx xxxxxxxx Based xx this xxxxxxxxx acquiring xxxxxxxxxxx x as xx primarily has x higher xxx present xxxxx xxxx corporation A.
xxxxxxxxxxxxxxx

 xxxxxxxxxxx x  xxxxxxxxxxx B 
x  xxx  xxxxxxxxxx  $48,035.14 
x  IRR  13.05%  16.94% 
c  Payback xxxxxx  3.64 xxxxx  xxx xxxxx 
d  PI  1.08  1.19 
x  xxxxxxxxxx xxxxxxx xxxxxx  xxx years  xxx years 
x  MIRR  xxxxxx  13.94% 
Net xxxxxxx Value (NPV) is described xx xxx disparity amid xx xxxxxxxxxx’x xxxxxx value xxx its xxxxx xxx law here xx xxxx we xxxxxxxxx xxxxxxxx with a xxx xxxxxxx xxxxx xxxxxxxx xxxx xxxxx and xxxx down the ones xxxx a net present xxxxx xxxx xx xxxx xxxx xxxxx The superior the xxx xxxxxxx value, the xxxxxxxxxx xxxxxxxxxxxx xxx xxxxxxxxxx is. xxxxxxx on xxxxx xxxxxxxxxxx x xx xxxxxxxxx xx xxxxxxxxxxx A xx xx xxx x xxxxxxxx xxx present value.
Internal xxxx xx xxxxxx (IRR) xx xxxxxxxxx xx the xxxx xx xxxxxx xxxx constructs the xxx
   more text follows   
Try it before you buy it 