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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 choicesthe 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 5-year projected income statement

b.    A 5-year 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.

Answer
Submitted by AlgebraExpert on Tue, 2014-08-05 12:19
teacher rated 206 times
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price: $9.99

QRB/501 QRB 501 Week 6 - Learning Team Assignment - Capital Budgeting Case - A+, work shown, and original!

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xxxxxxx QRB xxx xxxx 6 x Learning xxxx Assignment - xxxxxxx xxxxxxxxx Case x xxx work shown, and original!

file1.zip preview (1119 words)

QRB 501 xxxx x xxxxxxxx xxxx Assignment x Capital Budgeting xxxx xxxxxxxxx

Sheet2

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxx A Corporation B
xxxxx x 3 x 5x2 x 4x
xxxxxxxx 100000 110000xxxxxxxxxxxx146410.0000000001 150000 xxxxxx 174960 xxxxxxxxxxxx
xxxx Expenses20000xxxxx 26450 xxxxxxxxxx xxxxx66000 72600xxxxxxxxxx
xxxxxx Before Depreciation80000xxxxx 94550102683111430xxxxx96000 xxxxxx xxxxxxxxxxxx
less Depreciationxxxxxxxx xxxx xxxx 5000 10000 xxxxx xxxxx xxxxx xxxxx
xxxxxx Before Taxesxxxxxxxxxxxxxxx97683 xxxxxx xxxxx 86000 xxxxx xxxxxxxxxxx
Less Taxesxxxxx20500 22388 24421 26607 xxxxxxxxxx23090 24774 26557
xxx xxxxxx 56250 61500xxxxx 73262 xxxxx 60000 xxxxxxxxxxxxxxxxxxxx
Net xxxxxx xxxxx 23000 2645030417 34980 6000066000xxxxx xxxxxxxxxx
Add xxxxxxxxxxxx0 x0 x xxxxxx0 x 0 x
xxxxxxxxx Cash flowxxxxx xxxxxxxxxx xxxxxxxxxx70000xxxxx 72600 79860xxxxx
xxxxxxxx xxxx PV10%DR PVCash flow xxxxxxx xx
0 xxxxxxxx -250000xxxxxxx1 xxxxxxx
1 xxxxx0.909090909155681.8181818182 70000 xxxxxxxxxxxx 63063.0630630631
x665000.82644628154958.6776859504 745000.8116224332xxxxxxxxxxxxxxxx
372163 xxxxxxxxxxxx 54217.1299774606 xxxxx0.7311913813 xxxxxxxxxxxxxxxx
x 78262 0.6830134554 53453.9990437812 84323xxxxxxxxxxxx55546.1719328288
5 84822 xxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxxxxx
xxxx 20,979.41NPVxxxxx
IRR13.05%IRRxxxxxx
xxxxCash xxxx xxxxxxxxxxCash

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Answer
Submitted by tedhuge11 on Mon, 2014-02-10 05:03
teacher rated 42 times
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Capital Budgeting Case...A++ solution...

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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

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file2.xlsx preview (565 words)

xxxxxx

xxxxxxxxxxx
xxxxxxx 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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Answer
Submitted by Alvin on Mon, 2014-02-10 03:31
teacher rated 82 times
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price: $19.99

"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!

file1.xls preview (505 words)

xxxxxxxxxxx A

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxx A
xxxxxxxxx xxxxxx xxxxxxxxx
xxxx
1 23 4 x
xxxxxxxxxxxxxxxx$110,000 xxxxxxxx xxxxxxxxxxxxxxxx
Expenses $20,000 xxxxxxxxxxxxxx xxxxxxx xxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxx$5,000$5,000 $5,000
xxxx $75,000 $82,000$89,550xxxxxxx xxxxxxxx
Taxesxxxxxxxxxxxxxxxxxxxx$22,387.50 $24,420.63 $26,607.47
xxx xxxxxx$56,250.00$61,500.00xxxxxxxxxxxxxxxxxxxx$79,822.41
xx Operating Cash xxxx
Year
012 xx5
xxxx $75,000 $82,000 xxxxxxxxxxxxxx$106,430
xxxx xxxxxxxxxxxxxxxxxxxxxxxx xxxxxx$5,000 xxxxxx
Less: Taxes ($18,750.00)xxxxxxxxxxxx ($22,387.50) ($24,420.63) ($26,607.47)
Operating Cash xxxx xxxxxxxxxxxxxx $72,163 xxxxxxx $84,822
xx Total Projected xxxx xxxxx
Year
0 12 3 4 5
xxxxxxx xxxxxx xxxxxxxxxxxxx
xxxxxxxxx xxxx Flow xxxxxxxxxxxxxx$72,163xxxxxxxxxxxxxx
Total xxxxxxx xxxx xxxxxxxxxxxxxxxxx$61,250.00 xxxxxxxxxx xxxxxxxxxx$78,261.88 xxxxxxxxxx
xx xxx
Year
x x xxx5
xxxx Flow xxxxxxxxxxxxx $61,250.00 $66,500.00xxxxxxxxxx xxxxxxxxxx $84,822.41
PV Factor @10%1xxxxxx0.8264 xxxxxx xxxxxx 0.6209
xx xxxxxxxxxxxxxxxxxxxxxxx$54,958.68 xxxxxxxxxxxxxxxxxxxx xxxxxxxxxx
xxx$20,979.20
xxx13.05%
MIRRxxxxxx
xx1.08
xxxxxxx xxxxxx
xxxx xxxx xxxxxxxxxxx Investment Cash xxxxxxEnding xxxxxxxxxxx Investment
0 xxxxxxxx$0 $250,000
1 $250,000$61,250.00$188,750.00
2xxxxxxxx$66,500.00 $122,250.00
x $122,250xxxxxxxxxx xxxxxxxxxx
4$50,087xxxxxxxxxx ($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 xxxxxxEnding 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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Answer
Submitted by Smart Tutor on Wed, 2014-11-26 00:08
teacher rated 21 times
3.38095
price: $7.99

capital_budgeting_and_smiulation

body preview (4 words)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

file1.zip preview (1527 words)

Corporations x & xxxxx

xx a 1,050-1,500-word xxxxx xxxxxxx xxxxxxxx and interpret the answers xx items (c) through xxxx In that xxxx memo, xxxxxxx xxx xxxxxxxxx xxxxxx xxxx xxxx xxx why it supports xxxx decision xxxxxx in xxxx xxxx Also, xxxxxxx xx describe the xxxxxxxxxxxx    xxxxxxxxxx NPV xxx xxxx (Hint: The key xxxxxx here xx the discount xxxx used.) xx this xxxxx explain xxx xxx xxxxx xxxxxxx xxxxxxxx differently if xxxx xxx xxxxxxx xxxxxxxxx xxxxx (i.e., xx Corporation A had a 5-year xxxxxxxxxx and xxxxxxxxxxx B had x 7-year xxxxxxxxxxx  

xxxxxx xxxx below x detailed xxxxxxxxxxx analysis xx xxxx xxxxxxxxxxxxx xxxxx xx xxxx analysis, I would recommend xxxxxxxxx xxxxxxxxxxx B as it xxxxxx xxx a higher net xxxxxxx value than corporation xx

 

xxxxxxxxxxxxxxxxxx

 

 

Corporation A

xxxxxxxxxxx B

c

xxx

$20,979.20

$48,035.14

d

IRR

13.05%

xxxxxx

e

xxxxxxx xxxxxx

xxxx years

xxx years

x

PI

1.08

xxxx

x

Discounted Payback

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